Local businesses affected by skyrocketing food prices
DAVENPORT, Iowa (KWQC) - Whether you’re staying at home or going out to eat, you may have noticed food prices are eating at your wallet.
Local farms and businesses alike are dealing with how to gauge rising food prices for their own sales, and some industries are suffering more than others.
According to the U.S. Department of Agriculture (USDA), COVID-19 has hit food production companies hard. “It’s been a combination of a lack of help and lack of chain of supply, and the ability to do it,” said Dale Scherer, the owner of Scherer’s Custom Meats.
Meat and dairy prices have risen more than any other grocery item. For example, a $7 pound of beef in 2019 would cost $7.85 today. A gallon of milk that cost $3.14 back then would cost $3.68 today.
The USDA gathered a 7 to 12 percent inflation rate for meat and dairy products in the past year alone and its the middle man selling the finished product that makes the profit.
Companies like Smithfield and Tyson are responsible for packing and processing nearly 80 percent of the nation’s meat supply, according to NPR. With labor and transportation shortages causing an increase in demand, they are able to increase expenses for the consumer.
“Every single item seems to have gone up, its something that we talk about almost on a daily basis,” said Bill Collins, the owner of Me & Billy’s, “some of those prices go up drastically overnight.”
Staff at Me & Billy’s say they have to be aware of both prices that customers are willing to pay, as well as making a profit from their meals with the ingredients they buy at a higher price.
However, the suppliers of those ingredients, specifically meat and dairy, say they have not seen an increase in profit.
“Somehow along the way we got so few processors that they can create their own market,” said John Maxwell, the owner of Cinnamon Ridge Farms, “and consequently, the farmer gets skimped.”
Maxwell says he sees as little as 20 percent of profit for the wholesale product that is sold in the grocery store. “I’m getting a dollar a gallon and it is 4 to five bucks at the store,” said Maxwell.
Maxwell says when he sells straight from his own shop, the Country Cupboard, he makes a better profit for a better price.
Dale Scherer has seen the biggest growth in his business from customers coming to him, rather than the store, for product. He says the beef he sells is a similar price to that in the store, but much higher quality.
There are a few things to gather from the price increases we are seeing in food products. The first is that the backup in meat and dairy processing plants are causing demand for product to outweigh the supply, therefore raising costs.
The second is that the original product’s price before it is processed and sold in stores has not changed, causing the farmer to not gain profit from the increased cost.
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