Food prices continue to rise at an alarming rate. The 8.8% year-over-year increase (March 2022 over March 2021) is the largest in over 40 years.
Over the past seven months, the monthly year-on-year increase in food prices has been more than 4%, and each successive month has been higher than the previous month (starting at 4.6% in September and reaching 8.8% in March).
This increase in food prices is reflected in several food categories, from fresh fruit (10.1%) to fish and seafood (10.9%).
Soaring food prices are regressive and particularly damaging to low-income Americans, as they spend a greater share of their after-tax income on food than higher-income Americans.
So what should be done?
Beyond significantly reducing public spending, policymakers need to remove harmful government interventions that contribute to rising food prices, and energy is a great place to start. The Biden administration’s war on energy is having a devastating effect on Americans.
The latest year-over-year data shows that energy prices have increased by 32%. This is not an anomaly, as the year-over-year increases for each of the past six months have been over 25%.
Energy is an input that affects all sectors of the economy, including the food sector. For example, high energy prices drive up the costs to farmers of a key agricultural input; namely, fertilizer. More than 57% of the fertilizers used in the United States are nitrogen fertilizers, and a critical input for nitrogen fertilizers is natural gas, which can account for 70% to 90% of its manufacturing cost.
Removing harmful energy interventions would help alleviate some of the pressure on prices. For example, the Biden administration should end restrictions on the extraction and use of natural gas, including allowing the leasing of federal lands and the outer continental shelf for natural gas exploration and production.
He is also expected to withdraw his new final rule from the National Environmental Policy Act that reverses the Trump administration’s common-sense changes to speed up the development of energy and infrastructure projects.
Policymakers should also directly address rising fertilizer prices by removing controversial countervailing duties on Moroccan fertilizers and not imposing new duties on fertilizers from other countries, such as Trinidad and Tobago.
Energy is certainly not the only concern regarding rising food prices. The unprecedented labor shortages facing America have also contributed to the price increase. Labor policies, such as vaccination mandates and other COVID-19 related policies, in addition to work disincentives, have contributed to nationwide labor shortages.
These policies have made it more expensive and more difficult to employ people throughout the food supply chain. For example, companies in the fast food industry are experiencing a labor shortage and are offering large bonuses to attract potential employees.
Worse still, Russia’s invasion of Ukraine will only increase food prices.
There are many ways to address both concerns about food prices and concerns about food shortages in other countries related to the invasion. Many of these solutions relate to removing policies that impede efforts to increase the world’s food supply.
Domestically, U.S. policymakers should take action to combat the U.S. Department of Agriculture’s conservation reserve program, which pays U.S. farmers not to cultivate some of their land.
Farm groups recently petitioned the USDA to allow unused land to be harvested without penalty, but the USDA rejected the idea, arguing that it would have “a significant and detrimental impact on growers’ efforts to mitigate the climate change and maintaining long-term health”. of their land”.
So, instead of allowing increased food production to deal with a possible global food crisis and reduce food prices, the USDA seems more concerned about climate change.
The Biden administration’s claims that land covered by the conservation reserve program is ‘marginal’ and unlikely to aid agricultural production ignores that about 25% of unused land is considered prime farmland .
Moreover, even for “marginal” land, farmers – not federal bureaucrats – are in the best position to know if land use is appropriate, because they care most about “the long-term health of their land”.
Congress and the Biden administration should make it a priority to eliminate harmful interventions in the economy that help drive up food prices.
Taking these important steps is essential to ease the burden of inflation and allow American families to keep their hard-earned incomes.
This piece originally appeared in The Daily Signal