Today, June 6, the nation observes National Hunger Awareness Day amid years of rising food prices. To explain the increase, President Joe Biden and some policy experts offer the simplistic and misleading narrative of “greedflation.” To find solutions, however, it’s crucial to address the complex realities behind food price inflation.
Food insecurity is indeed a pressing issue, with about one in nine North Carolinians struggling to secure enough food for a healthy lifestyle. This challenge is exacerbated by the lack of access to affordable and nutritious food options, particularly in low-income and rural communities. Biden’s rhetoric that companies are engaging in greedflation, meaning widespread “price gouging,” to increase profits is misleading, however. The president fails to consider the broader economic context of food insecurity.
Blaming “greed,” as if it were something new, is mere political rhetoric. After all, greed did not just magically appear in the wake of the COVID-19 pandemic. The reality is that food price inflation is the result of a confluence of factors, many of which are beyond the control of individual corporations.
First, the disruptions to global supply chains caused by the pandemic have had a significant impact, leading to shortages of essential goods and raw materials. These supply chain issues have forced companies to incur higher costs, which they have had to pass on to consumers. Similarly, labor shortages in the agriculture and food manufacturing sectors have driven up wages and benefits, further contributing to the rise in production costs.
Second, the role of external factors, such as weather patterns, cannot be overlooked. Extreme weather events, including droughts and floods, have affected agricultural output, reduced the supply of key commodities, and driven up prices. For example, the drought conditions in the past several years have led to smaller cattle herds and have resulted in increased beef prices.
Moreover, global economic conditions, including higher fuel and transportation costs, have further strained food supply chains. The cost of transporting goods has risen due to increased fuel prices and logistical challenges, adding another layer of expense that businesses must account for.
It’s also important to consider the dynamics of market competition. In a competitive market, if one company were to raise prices significantly just for profit, it would risk losing customers to competitors offering the lower, market-rate prices. This competitive pressure tends to keep prices in check, as businesses strive to maintain their market share.
Plus, there is competition across the many segments of the food industry. Widespread and coordinated price gouging is unlikely. The temptation for some companies to undercut the rising prices of “greedy” companies in order to gain market share would be too great.
Furthermore, regulatory oversight plays a crucial role in monitoring and addressing potential price manipulation. The Department of Justice (DOJ) and the Federal Trade Commission (FTC), as well as states’ attorneys general, have the authority to investigate and take action against unfair business practices, including price fixing and collusion. The lack of substantial evidence from these bodies supporting the greedflation narrative further undercuts its validity as an explanation for food price inflation.
Of course, the main driving force behind price inflation generally, including the rapid rise in grocery bills, is the $7 trillion of new money created out of thin air by the Federal Reserve in the two years following the onset of the COVID-19 pandemic. As Milton Friedman once said, “Inflation is always and everywhere a monetary phenomenon.” Ratcheting up the money supply by nearly 50% in just 24 months will inevitably send prices soaring.
Finally, even as some companies may have increased prices and profits during inflationary periods, attributing the broad phenomenon of food price inflation to “corporate greed” alone oversimplifies a multifaceted issue. It disregards the legitimate cost pressures and economic dynamics that businesses face.
The focus on greedflation creates convenient political scapegoats while diverting attention away from addressing the real structural and systemic challenges within the food supply chain and broader economy. Structural issues include environmental regulations that increase the price of inputs for farmers, certifications needed to sell certain products, and a vast number of regulations on the processing and labeling of food.
On this National Hunger Awareness Day, let’s move beyond the misleading rhetoric of “greedflation” and focus on developing comprehensive solutions to address the complex challenges of food insecurity and price inflation. Only by acknowledging the nuanced realities can we work towards a more resilient and equitable food system that serves the needs of all Americans, including those here in North Carolina.