5 Factors that Affect Food Prices
Food prices can be affected by several factors:20
All crops are affected by the weather during the growing season. If the growing season is too wet, too dry, or too cold, or too hot, crops cannot thrive. A scarcity or shortage of a crop may mean it will cost more. When a good growing season results in a surplus, food prices may go down.
Like weather, factors such as pest damage and disease can destroy a crop or affect livestock production.
3. Transportation Costs
When the price of oil and gas are higher, it costs more to transport food through the steps from farm to plate (e.g. to processing facility, to the store). This can impact the price of food.
4. Labour Costs
The agri-food system requires a lot of people to make it work (farmers, packers, processors, retailers, etc.). Many job opportunities exist in this system. If the cost of labour goes up (e.g. minimum wage is increased) food prices may increase.
Political and economic situations can influence the price of food, either up or down.
In 1900, fifty cents of every dollar earned was spent on food. Today the amount is just 10.6 cents on average!19