Food and Drink

Solar Cookers: Save Money, Save Lives, Save the Planet by Cooking with the Sun’s Rays

Scott BuchananLeave a comment

The Case for Solar Cooking

We all know we ought to reduce our CO2 generation to mitigate global warming and to conserve limited fuel reserves. Without descending into a tussle over exactly how man-made it is or whether it is part of a natural cycle which may turn soon to plunge us into yet another ice age, it does seem clear that the earth is experiencing a warming trend with possible serious consequences, and it is obvious that fossil fuel reserves (oil, natural gas, coal) are finite.

Although domestic cooking in developed countries comprises only a tiny fraction of total energy consumption, this is not true in some regions. Some 2 billion people still cook over fires of wood, charcoal, or animal dung. It is usually the women doing the cooking over these fires, inhaling smoke with all its consequences. Also, it is again women who largely end up gathering the fuel. All this gathering and fire-tending consumes time which takes away from other tasks like raising food. Also, women are often assaulted in the forests while they are foraging for wood.

It is possible to construct devices which capture enough of the sun’s rays to cook food (more technical details below). Many NGOs try to help people in poor, mainly sunny/tropical regions and in refugee camps to purchase or construct solar cookers. It is possible to set up cottage industries for locally making and selling these devices at low cost. It is just a win-win-win.  Solar Cookers International specializes in this work, and has developed and shared some of the most useful technology here. They claim some four million solar cookers are in use, and present figures for how much CO2 emissions and money for fuel are saved.

Why is this relevant to us in the West? Well, if we care to help the lot of the less-fortunate, we can give money to support these solar cooking initiatives. As noted, they can help the well-being of people, especially women, in many ways. A less-obvious  impact of us using solar cookers in our own homes is that folks in other lands are aware of our life-styles. It turns out that a non-trivial barrier to wide-spread adoption of solar cooking is that they are suspicious of Western aid workers promoting a method of cooking that no one back in the developed countries uses. If solar cooking could be more visible in our lifestyles it would have a significant effect in lands where it is really needed.

And getting around to our more personal motivations – it is kind of intriguing and rewarding to cook directly from the sun. On a hot day, it can mean cooking a casserole without heating the oven/kitchen. You can do great projects with kids (your own or others), designing and making and using solar ovens. And of course, you can signal your virtue by reducing your CO2 footprint.

If you find yourself in some situation when you have no other means to cook, a solar cooker could be a life-saver. To temper this reality, however, in most  temperate regions there will be many days without sufficient sunshine to make these work. Also, they are often much slower to heat up and cook than conventional stoves, so you need to plan ahead. That said, if you have a sunny morning or afternoon, you can put your pot of rice or whatever out to cook in the sun, go about your business, and come back in 2-3 hours, knowing your “solar crock pot” will have simmered your dish without burning it.

Types of Solar Cookers

I find the technical details here fascinating, but I will skip the juicies here and just briefly describe how these things are made and how they work. In all cases, there are some mirrored reflecting surfaces which concentrate the sun’s rays onto a cooking pot. For reflecting surfaces, one can glue aluminum foil onto cardboard. However, the foil grows dull with time, so it is better to use some kind of aluminized plastic surface, such as car windshield reflectors, mirrored craft adhesive sheeting, or even the insides of potato chip bags. Usually, the pot is in some kind of enclosure which is transparent to let the sunlight in but traps heat around the pot.  

There are a number of configurations that work. A description of various designs, with illustrations, is here  and here.

Perhaps the most minimalistic solar cooker is the panel cooker. Here, the pot is enclosed in a clear  oven bag or within two glass bowls. Segmented or curved reflective panels are arranged to reflect the sun on the pot from multiple angles. Solar Cookers International’s Cookit ($50) is said to be the most widely produced solar cooker, and it is of this design. There are many DIY designs floating around, including ones made from bent car windshield sun screens. A high-end, high-performance panel solar cooker is the Haines 2 ($100). These panel cookers lose effectiveness in cold, windy conditions, due to excessive heat loss.

Another design that people make a lot at home (see the internet) is a box solar cooker. Typically, you use a smaller cardboard box within a larger box, with the spaces between the two boxes filled with some kind on insulation (e.g., crumpled newspaper). A hinged glass lid and some reflecting panels on top of the box complete the device. A very expensive ($450) but very effective box-type solar cooker is the All-American Sun-Oven. This can function year-round, but takes up a lot of space in storage.

In tropical regions with the sun high overhead, there is some use of a plain, large parabolic mirror which can focus a very hot spot of sunlight onto the bottom of a pot or pan suspended above the mirror.

A more recent, high-tech approach is the line of solar cookers from Go-Sun. These feature smallish parabolic reflectors that focus the rays on a long, skinny cooking tube inserted in a double-walled glass tube with vacuum insulation. These cookers have only medium size capacity, but cook food really hot, really fast (e.g., can bake biscuits) and are not affected by cold weather. So, they are the most convenient and versatile cookers in many ways, although they do best with relatively solid foods like hot dogs or breads or cut-up meat or vegetables, not with liquidy loads like stew or soup or simmering beans. (Full disclosure: I caved in to my itch for one of these things, and have put it on my birthday list).

My $109 Raspberry Plant: Growing “Raspberry Shortcake” in a Container

Scott Buchanan1 Comment

One of Warren Buffet’s most famous quotes (channeling the venerable Benjamin Graham) is: “Price is what you pay; value is what you get.”  He thus rationalizes buying top-quality companies or stocks, even if their price is not beaten down. So, allow me to explain why I put over $100 into a single, not-very-large raspberry plant.

In various earlier homes I have lived in, I have grown raspberries. To my way of thinking, this is an ideal crop for a home gardener. You can get maybe five bare-root dormant plants from a gardening supply house like Burpee in the early spring, plant them in the ground, and by that fall have a crop of sweet, flavorful berries you can eat right off the bush. And then you have a perennial bed that will fill in with even more canes each year. The “everbearing” (“fall-bearing” or primocane) varieties like Heritage or Caroline can produce from June through early October, depending on your climate zone. Not many pests attack raspberries, and the only maintenance needed is pruning, fertilizing, and watering during droughts. They do need nearly full sun, and well-drained soil.

I now live in a townhouse, However, I did want to grow raspberries, partly for the fun of growing my own food, partly out of nostalgia, and partly to give my grandson the experience of picking food from a plant instead of from a grocery store shelf.

The townhouse I live in now only gets nearly-full sunlight at one corner of the house. There is no appropriate garden bed there, so I need to use a container. Raspberries normally grow 3-4 feet tall, with roots that go down maybe two feet. I did not really have the space for a two-foot high/two-foot diameter container, and such a large container would be hard to move around. So last year I tried to grow a regular raspberry (Glencoe variety) in maybe a 14-inch x 14-inch pot. It was a total fail. The root space was just too small for this large a plant, I think.

So this year I regrouped, dug deep in my wallet, and bought a special dwarf raspberry called “Raspberry Shortcake.” This variety is bred to grow in small spaces. This plant is mostly supplied in a #1 size pot (nominally 1 quart, but actually smaller). I was impatient and wanted a larger plant that would bear fruit this year, so I spent more and bought a larger (# 2 pot) plant from Plant Addicts. It arrived in late April, and I transplanted it to a 16” x 16” (40 cm x 40 cm) plastic pot from Better Homes and Gardens. This pot is white, which I hope will reflect some of the sun’s heat during the summer.

This is a summer-bearing (floricane) raspberry, so it will only bear fruit for a few weeks in June-July. However, there is a new Asian fly pest spreading in the U.S. that attacks raspberries later in the season, so it may be best to avoid the fall-bearing varieties now anyway.

The plant had been pruned back to several slender, woody stems about ten inches high. Each of these stems has since put out several side shoots, most of which have now borne clusters of berries at their tips. I have enjoyed several dozen berries, and they are still coming. Also, I have had the pleasure of seeing my grandson pick and eat berries off the bush. I am a satisfied customer. Photos:

And close-up on the berries:

This plant cost me $72 ($57 plus $15 shipping). We got lucky with the pot, paying only about $22, when you can easily pay twice that for this sized pot. Potting soil was another $15. So about $109 all-in.

Obviously, I could have bought many little cartons of raspberries in the store instead for $109. I paid a high price for my plant, but got a value that I am satisfied with.

POSTSCRIPT: Just for completeness, to inform other would-be buyers of this plant – – it’s berry production peaked in mid-June here in U.S. growing zone 7a. It continued to produce a few berries a day till the end of the month. Since about July 1, it still produces perhaps an average of one berry a day, with 6-7 visible on the bush at any one time, but they are not ripening properly. Sometimes they just fall off before they are ripe, but most often they ripen very unevenly: some of the little “drupes” turn dark red (and then sometimes fall off) while the rest are still whitish. This may be a reaction to the heat, it is sunny and has hit 90 degrees F nearly every day, so the soil around the roots in the pot is way hotter than it would be for an in-ground planting . Anyway, none of this takes away from the satisfactory performance in June.

Post-PostScript: After watering the plant more frequently to let it transpire like crazy in the heat, and also after I loosely wrapped a 14-inch high strip of aluminum flashing around the pot to deflect some of the sun’s rays, the berries seem to be ripening better…getting 1-2 berries a day, though July 15, though they really are petering out now.

Chocolate Prices Will Shoot Up

Scott Buchanan2 Comments

I write about various topics, usually with at least some loose connection to economics. Sometimes these are fairly macro issues, other times there are specific, actionable observations. For instance, back in March of 2021, we inferred from the critical shortages of semiconductors that car manufacturing would be severely crimped, likely leading to big price increases in cars.  Our post “Chip Shortages Shutting Down Auto Assembly Lines; Buy Your Car Now Or Else” came out just in time (red arrow below) to alert the readership here:

https://fred.stlouisfed.org/series/CUSR0000SETA02 – – Consumer Price Index for All Urban Consumers: Used Cars and Trucks in U.S. City Average

Chocolate Prices

But now, a price increase of more ubiquitous import looms. Most of us were not in the market for cars in March of 2021, but some 81% of us eat chocolate, with the average American consuming about 9.5 pounds a year. Indeed, 50% “cannot live without it every day.”

And so, it is with a heavy heart that I bring warning of a rise in the price of chocolate. Back in pandemic lockdown, I was bored and speculated a few bucks in cocoa futures, as tracked by the NIB exchange traded fund. My shares went up, and then down, and I sold out to limit losses (which was a good move at the time), and moved onto other investments.

Imagine my surprise when I randomly checked on NIB this week and saw the price ramp-up in the past few months:

Source: Seeking Alpha

A quick internet search led to a CNBC article which confirmed my worst fears:

“The cocoa market has experienced a remarkable surge in prices … This season marks the second consecutive deficit, with cocoa ending stocks expected to dwindle to unusually low levels,” S&P Global Commodity Insights’ Principal Research Analyst Sergey Chetvertakov told CNBC in an email.

…Chetvertakov added that the arrival of the El Niño weather phenomenon is forecast to bring lower than average rainfall and powerful Harmattan winds to West Africa where cocoa is largely grown. Côte d’Ivoire and Ghana account for more than 60% of the world’s cocoa production. 

The price of cocoa will feed into the price of consumer chocolate products, especially dark chocolate which has more actual cocoa content. And the price of sweets generally will rise on the back of sugar prices, which stand at 11-year highs, driven again largely by weather.

There is still time to stock up ahead of the hoarders…

Unpopular Grocery Opinions

Zachary BartschLeave a comment

You needn’t stop at stop signs in parking lots.

Road signs on private land are often not legally enforceable by the police. You can ignore right-of-way and most signage in a parking lot or a parking-lot-adjacent path. I’m not saying that signs don’t serve a useful function. The stop in front of a Target or Publix is there to help coordinate drivers and pedestrians. It’s mostly a prudential matter. If it’s crowded, then those signs act coordinate us where norms might differ. But, if it’s late and no one is around, then you can safely run all of the parking lot stop signs with impunity. Be careful, however. The police can’t get you. But if you harm someone or something, then you can still be liable for neglect in a civil suit. That’s because neglect is contextual and expectations matter. If people treat parking lot signs like there are real road signs, then flaunting them can be construed as neglect.

You Can Park in Handicap Spaces.

If you’re *really* anti-social, then you should look up your local or state handicap accessible parking rules. Usually, police do have the power to ticket vehicles lacking the proper disability tags. BUT, the handicap parking space must conform to specifications. Where I live, for example, there must be an minimum sized sign that stands completely above 5 feet high in order to clearly demark the space. Therefore, if you see a handicap spot that is only noted by asphalt paint, then you’re free to park there.

Return your Shopping Cart… Or Don’t

Nothing says that you must return your shopping cart to an outdoor, covered, or indoor corral. People say that they have strong feelings about this (it’s not clear to me that they actually do). I say it’s not a fruitful exhortation. Let’s consider multiple perspectives and set aside the issue of civil liability due to neglect that I outlined above.

Continue reading →

Twenty Years of Animal Protein Affordability

Zachary Bartsch2 Comments

Have you heard the hubbub about eggs? People say that they’re expensive. My wife told me that if she’s going to pay an arm and a leg, then she may as well get the organic, pasture raised eggs. Absolutely. That’s what the substitution effect predicts. As the price ratio of low-quality to high-quality eggs rises, we’re incentivized to consume more of the high-quality version. It has to do with opportunity costs.

Consider a world in which the low-quality eggs cost $2 and the high-quality eggs cost $6 per dozen. Every high-quality egg costs 3 low-quality eggs. You might still choose the high-quality option, but you know that you’re giving up a lot by doing so. Consider the current world where low-quality eggs are priced on par with high-quality eggs. Now, the opportunity cost of consuming the fancy, pasture-raised eggs has fallen. When consuming one high-quality egg costs you one low-quality egg, it’s much easier to opt for the high-quality version. You’re not giving up as much when you purchase it.

For vegetarians, the recent price swing has probably been rough. Not eating meat, they’re facing the price squeeze more so than their omnivorous counterparts. Through the magic of math, median wages, and average retail prices, the figure below charts the affordability of eggs and dairy products.* The median person has been facing falling egg affordability for two decades. Indeed, it’s only been the past few years, punctuated by the Covid crisis, that consumers experienced more affordable eggs.

Dairy products, however, have become much more affordable. The median American can now afford 50% more of their namesake cheese. Further, we can afford 20-25% more whole milk and cheddar cheese. So, the vegetarians are not so poorly off after all.

But how do meatier sources of protein compare?

Continue reading →

The Social Drug of Prohibition

Zachary Bartsch1 Comment

Why does the average drinker consume alcohol? There are plenty of reasons, one of which is social. Alcohol, while inhibiting clarity, precision, and discretion, is a social lubricant. If you’re one of those drinking, then it’s enjoyable to be around other drinkers. Also, people build the habit of drinking *something* while socializing. We all know that prohibition resulted in bootlegging and tainted cocktails. But what were the legal alternatives? One was that you could purchase grape juice and make your own wine (that’s a story for another time). Another is to switch to another drug.

Alcohol is a depressant and arguably the most popular one in the US. It’s not a clear substitute for alcohol in terms of its direct effects on the body. However, it’s a liquid, safe, and tasty. That make is a good candidate for satisfying the physical urge to imbibe. But, importantly, it is also a social drug. People would get so hopped up on coffee and feed off of one another’s high that Charles the II of England banned coffee houses in order to prevent seditious fomentation. This brings us to an important characteristic of coffee. It’s a stimulant. You’d think that a stimulant would not be a substitute for alcohol. If anything, one might think that they are complements. Coffee helps to provide that kick in the pants after having an enjoyable night. But, the social feature makes coffee a good candidate to substitute alcohol, should the times be dire.

Illegal activity aside, people wanted an outlet for their physical and social proclivities. They wanted intoxication. Coffee provided exactly that. Conveniently, the continental US didn’t grow any of its own coffee. That means that imports and domestic consumption have a tight relationship.

Continue reading →

ASSA 2023: New Orleans!

James Bailey1 Comment

Today the largest annual gathering of economists begins, in-person for the first time in 3 years. It won’t be as big as the pre-Covid conferences, but I’m excited to spend a few days in New Orleans for the first time since I moved away in 2017. I lived there for 4 years; in the eventful 5 years since my knowledge likely became somewhat out of date, but I hope I can still provide some guidance for those new to the city.

For most people the main destination is the French Quarter. People are right about this; it is great to walk through to see the old colonial buildings, hear the street music, and eat the food. Some of the ASSA hotels are in the Quarter, but for those staying downtown or in the Warehouse district its definitely worth the walk. The Quarter is a big, diverse place, not only for tourists. Bourbon Street is the tourist trap. It is probably worth seeing once, but be prepared for crowds, loud music, and touts trying to get you into bars and strip clubs. The standard advice now is to skip Bourbon St and hang out on Frenchman street instead- which is in the Marigny, just east of the Quarter. There are two blocks entirely packed with bars / jazz clubs. Any evening you will have at least 5 shows to choose from, usually jazz, usually with no cover. Café du Monde is the other Quarter attraction that everyone does, and with good reason. They have decent coffee, and great beignets (a donut / fried dough sort of thing drowned in powdered sugar). There is often a long line to get a table or to get to-go, but usually not for both at once. There is a river walk just south of Café Du Monde, and the Jackson Brewery building is just east- there is a good place to sit and look at the river beside their food court.

In a short trip it would be entirely reasonable to just stay in the Quarter. But if you’d like to get out, the main attraction of New Orleans to me is the parks. Audobon Park is west of the Quarter in Uptown. It stretches from the Mississippi river to the Tulane and Loyola campuses. City Park is north of the Quarter in Mid-City, and is home to the Art Museum and Sculpture Garden. Both can be reached by trolley, and both are full of lovely ponds and interesting waterfowl. At the big lake in city park you can rent kayaks, or get a ride in a gondola.

People associate New Orleans with Cajun food, but most of the Cajuns settled to the west. The traditional New Orleans cuisine is Creole- a blend of the Italian, French, and other settlers. When I think about what makes restaurants attractive, I think about three things- food, prices, and everything else (service, wait times, ambience). In New Orleans it is very easy to find places with great food at good prices, but rare to find good places that also have short wait times and good service (Commander’s Palace, the best restaurant in the city, is already booked solid). My restaurant recommendations are the thing most likely to be out of date, so I’ll keep it short:

  • Central Grocery- original home of the Mufalleta, a creole sandwich. In the French quarter. 
  • Dat Dog- fancy hot dogs (mostly sausages) with more toppings than you could ever want to choose from (including crawfish etouffee). One location is on Frenchman St- you can often hear live jazz from the bars by while sitting on their balcony. Cheap.
  • Hotel Monteleone- classy bar, often with live jazz, home to the rotating Carousel bar. One of many good places to try old New Orleans cocktails like the Sazerac. I’ll be staying here trying to get a spot on the Carousel.

New Orleans is unlike anywhere else in the US, almost like a Caribbean island (it practically is an island, surrounded by lakes, rivers, and swamps). The highs (food, music, knowing how to have a good time) are higher than just about anywhere else here, though the lows are also lower. One of the most special things about it is Mardi Gras. Mardi Gras day isn’t until February 21st this year, but Mardi Gras is really a whole season in New Orleans- and the first parade, Krewe of Joan of Arc, starts right in the Quarter on Friday January 6th (Twelfth Night).

Enjoy the city, and let me know if you’d like to meet up.

Food Price Increases Won’t Be Solved by Raising Interest Rates

Scott Buchanan1 Comment

I make a hobby of reading, and sometimes acting on, investment advice, particularly regarding high-yielding securities (many of my holdings are now yielding over 10%/year). One of the best authors on the Seeking Alpha investing site writes under the name of Colorado Wealth Management. He mainly writes on REIT (real estate investment trust) stocks, but recently opined on the wisdom of raising interest rates to combat inflation regarding some of the major components of CPI.

His article, Why High Yields Will Be Popular Again, may be behind a paywall for some readers, so I will summarize some key points. He kind of sidesteps the influence of massive federal deficit spending that injected trillions and trillions of new dollars into the economy for COVID, which I think has been the major driver for this inflation; and the reignited deficit spending which is already on the books for November and likely even huger for December of this year. However, he does make some interesting (and new to me) points regarding food prices in particular.

He sees the price 2021-2022 price increases in some major food items as being driven by supply constraints, rather then by excessive demand. Specifically eggs, coffee, and vegetable oils have been hit by exogenous factors which have constrained supply; raising interest rates will not help here, and may even hurt if higher rates make it harder for farmers to recover and re-start high production. I’ll transition to his charts and mainly his excerpted words, in italics below:

Avian Flu, Culled Hens, and the Price of Eggs

The background here is that tens of millions of chickens, including egg-laying hens, have been deliberately killed (“culled”) this year in an attempt to slow the spread of avian flu. This, of course, cuts into the egg supply and raises egg prices. We went through a similar cycle in 2015 with avian flu, where culling led to a rise in egg prices, but then prices fell naturally as a new crop of chicks grew into egg-laying hens. Similarly, the current shortage in eggs should correct itself:

Raising interest rates has never produced additional eggs. Raising interest rates and driving a recession (with larger credit spreads) only makes it more difficult for farmers to get the funding necessary to replace tens of millions of hens that were culled to slow the spread of the avian flu….If interest rates don’t work, what will? The cure for high prices is high prices. We can see how it played out with the Avian flu in 2015:

  • Is Jerome Powell going to lay even one egg? Probably not.
  • Are farmers going to focus on turning their chicks into egg-laying hens? Absolutely.

Since eggs go into several other products, it drives inflation throughout the grocery store. Even if a product doesn’t use eggs, the drop in egg production means more people eating other foods.

Drought in Brazil and the Price of Coffee

Coffee prices have been rising rapidly. Well, domestic prices have been rising rapidly. Global prices actually declined since peaking in February 2022:

So, what drove the price up? Brazil normally produces over 35% of the world’s coffee and bad weather in Brazil (not to mention the pandemic impacts) drove dramatically lower production in 2021. As the shortfall in production became evident, global prices began rising rapidly. That’s why the global [wholesale] prices were ripping higher in 2021, not 2022. However, [retail] consumers are seeing most of the impact over the last several months.

War in Ukraine and the Price of Sunflower Oil

Margarine requires vegetable oil. Soybean, palm, sunflower, and canola oil are the key ingredients. What country produces the most sunflower oil? Ukraine. This is one of several inflationary impacts of the war. You can see the impact of reduced supply in the following chart:

Government Bungling in Indonesia and the Price of Palm Oil

What happened to palm oil? How could it soar so much and then fall so hard?

The first issue is that dramatic increases in the price of fertilizer made production more expensive. … That contributed to a reduction in supply. However, Indonesia is the world’s largest exporter of palm oil. Yet exports of palm levy were subject to a huge levy. That made exporting far more expensive. Despite the levy, it was still worth producing and exporting palm oil. Then the Indonesian government decided to simply ban exports over concern about higher domestic prices. Banning exports for a country that produces 59% of the world’s total palm oil exports had a predictable impact.

If you guessed that the supply of palm oil couldn’t be sold domestically, you’d be right. The ban was lifted. However, it was only after:

“High palm oil stocks have forced mills to limit purchases of palm fruits. Farmers have complained their unsold fruits have been left to rot. There were 7.23 million tonnes of crude palm oil in storage tanks at the end of May, data from the Indonesian Palm Oil Association (GAPKI) showed on Friday.“

With palm oil prices at all time-record highs, nearly triple the level from two years prior, the supply was left to rot. Each business tried to make the best decision they could, given the ban on exports. Rather than record profits for mills and record profits for farmers, the produce was wasted. That’s supply constraints for the global market, and it destroys the local economy.

Global prices are plunging now as mills seek to unload their storage. As bad as the higher prices were for the rest of the world, no one suffered worse than the farmers whose product became worthless as a result of government failure.

Contrary to today’s popular opinion, higher interest rates won’t do anything to improve production of vegetable oil.

Thanksgiving Dinner is Once Again More Expensive (But Not the Most Expensive Ever)

Jeremy Horpedahl3 Comments

Last year inflation hadn’t quite hit the levels we would see in 2022, but they were already rising. When Thanksgiving rolled around, many media sources were reporting that it was the “most expensive Thanksgiving ever.” In nominal terms that was true, though in nominal terms it isn’t that surprising. In a post last year, I compared the prices of Thanksgiving dinners (using the same data from Farm Bureau) to median earnings going back to 1986. While 2021 was more expensive the 2020, it turned out it was still the second lowest it had been since 1986.

As you might expect, this year’s Thanksgiving dinner is even more expensive than last year in nominal terms. It’s up about 20% since last year or over $10 more, according to Farm Bureau. That’s certainly more than the overall rate of inflation (7.7% in the past 12 months) and more than inflation for groceries (12.4% in the past 12 months). But how does that compare with median wages? Comparing the 3rd quarter of this year with the same quarter in 2021, median wages are only up about 7%, certainly not enough to keep up with those rising turkey prices.

When we add 2022 to the historical chart, here’s what it looks like.

The spike in the last 2 years is clear in the chart but notice that at about 6% of median weekly earnings, we have essentially returned to the average level of the entire series. From 2017-2021, we could be thankful that the price of your Thanksgiving dinner had dropped below that 6% level. We’ll have to find something else to be thankful for this year.

The Price of Food: Farm to the Table

Zachary Bartsch2 Comments

If you’re like me, then you are very fond of food. What determines the price of food? Supply and demand of course!

We can consider food as a commodity because just about anyone can buy and sell it. Almost all foods have partial substitutes. Therefore, the long-run price in the competitive market for food is largely dictated by the marginal cost. Demand has an impact on the price only in the short run.

A long-run driver of food prices are the costs that food producers face. The US Bureau of Labor Statistics divides the Producer Price Index into multiple categories that are relevant for a variety of sectors and points within the production process. Below is a table of the most fundamental, relatively unprocessed farm products and their weight among all farm products in December 2021. Cotton is a relatively large component for farm products even though it’s not a food and I include it for completeness. Fruits, veggies, and nuts makeup the overwhelming proportion of the cost of farm products. I was at first surprised that grains composed such a small proportion. But, being dirt cheap, it makes sense.

We all know that inflation has been in the news. It’s been elevated since the second quarter of 2021. Consumer prices tend to lag producer prices. One indicator of where food prices will be in the near future is where the producer prices are now. Below is a graph that displays the above seasonally adjusted farm product prices since the start of 2021*.

Continue reading →