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Restaurants are moving towards dynamic menu prices. Expect big surcharges for peak times. Don’t expect off peak prices to drop much. Labor costs are rising too.

CPI food indexes prices, data from the BLS, chart by Mish

Surge Pricing Is Coming to You

Restaurants are experimenting with surge pricing to deal with peak hours and staffing demand. They like it. You probably won’t.

The Wall Street Journal reports Surge Pricing Is Coming to More Menus Near You

Restaurants like San Diego-based Cali BBQ are experimenting with a form of the dynamic pricing long used by airlines, hotels and ride-hailing services. Technology providers are pitching services that enable restaurants to change prices weekly or monthly, increasing or slashing the cost of a taco or sandwich between a few quarters to several dollars, depending on demand and sales patterns.

Dynamic pricing—charging higher rates at peak times and dropping them at slower ones—has become commonplace in industries such as e-commerce, and mobile apps have made it easier for companies to study consumers’ buying and browsing and quickly adapt. Rising costs in recent years have led more retailers to implement it.

Restaurants are experimenting with the technology as the industry looks for ways to boost sales and increase profits. Many restaurants increased menu prices as labor, food and other costs have soared since 2021.

Wendy’s drew public scrutiny after the burger chain said in a mid-February earnings call that it was looking to test dynamic pricing. The chain said it would invest around $20 million in its U.S. restaurants to install digital menu boards by 2025 that could suggest items to customers and present different offerings depending on the time of day.

…click on the above link to read the rest…

World Food Prices Jump Most In 18 Months

August 5, 2023

World Food Prices Jump Most In 18 Months

Global food prices increased the most in 1.5 years as trade disruptions from the El Nino weather phenomenon battered agricultural-producing countries, and Russia’s exit from a crucial UN-backed agriculture deal stoked supply concerns.

The Food and Agriculture Organization of the United Nations (FAO) reported Friday that the global food index, which tracks monthly changes in the international prices of globally-traded food commodities, averaged 123.9 in July, up 1.3% from the previous month.

The FAO Food Price Index’s July print was the largest monthly gain since March 2022.

FAO explained the FAO Vegetable Oil Price subcomponent of the index was responsible for the monthly increase:

The increase was driven by a sharp jump in the FAO Vegetable Oil Price Index, which rose 12.1 percent from June after seven months of consecutive declines. International sunflower oil prices rebounded by more than 15 percent in the month, due mostly to renewed uncertainties surrounding the exportable supplies after the Russian Federation’s decision to end implementation of the Black Sea Grain Initiative. World prices for palm, soy and rapeseed oils increased on concerns over output prospects in leading producing countries.

Also, the FAO All Rice Price Index increased 2.8% on the month and 19.7% on the year due to “India’s 20 July prohibition of non-parboiled Indica exports fostered expectations of greater sales in other origins, amplifying upward pressure already exerted on prices by seasonally tighter supplies and Asian purchases,” the report said.

This upward pressure on rice prices “raises substantial food security concerns for a large swathe of the world population, especially those that are most poor and who dedicate a larger share of their incomes to purchase food,” FAO warned.

We noted in April and in early May, “El Nino Watch Initiated As Ag-Industry In Crosshairs” and “Global Rice Shortage Looms, Set To Be The Biggest In Decades” as a disruptive El Nino weather pattern wreaks havoc on the world’s ag crops.

Rising food prices risk fueling social instability for the weakest emerging market economies.

“The Summer Of Starvation”: Soaring Fertilizer Prices Unleash Chaos, Hunger Worldwide

June 8, 2022

“The Summer Of Starvation”: Soaring Fertilizer Prices Unleash Chaos, Hunger Worldwide

One of the most pernicious consequences – if primarily for the anti-Russia west – resulting from the Ukraine war, has been the unprecedented spike in fertilizer prices which among other things, has sparked a historic surge in food prices and collapse in supply chains around the globe, as we discussed in these articles published over the past few months:

Fast forwarding to today, when we have some good, some bad and some pretty terrible news. The good news it that fertilizer prices have eased modestly from all time highs, as the following chart of Tampa Ammonia CFR spot prices shows.

The bad news is that the the price hasn’t dropped nearly enough: according to Bloomberg, the glut of fertilizers piling up at the biggest Brazilian ports signals that the price of the nutrients has to drop further before farmers start buying.

In Paranagua, private warehouses reached their maximum storage capacity of 3.5 million tons, Luiz Teixeira da Silva, Paranagua’s operations director told Bloomberg. A terminal operated by VLI Logistics, one of the two at Santos port that store fertilizers, is also full, according to people with knowledge of the matter who asked not to be named as the information isn’t public.

As noted above, the price of fertilizers across the globe has exploded to unprecedented levels, and Brazil has been no exception.

…click on the above link to read the rest of the article…

Food Riots In Sri Lanka Turn Deadly As Protesters Beat Up Police, Burn Down Politicians’ Houses

May 13, 2022

Food Riots In Sri Lanka Turn Deadly As Protesters Beat Up Police, Burn Down Politicians’ Houses

Two months ago, we noted the first Arab Spring 2.0 incident when, as a result of soaring food, energy (and everything else) prices, thousands of angry Iraqis took to the street to protest. Needless to say, their complaints did not get much traction, and in the meantime food prices have only exploded to fresh record highs, far surpassing the levels hit in 2011 when riots against, you guessed it, food prices toppled most MENA political regimes (not without some CIA backing).

And as food prices keep rising, the protests across poor nations keep escalating, and on Thursday protests broke out in Iran leading to at least 22 arrests, after the government cut subsidies for food, sending prices through the roof as authorities braced for more unrest in the following weeks, Fox News reports.

In videos shared on social media, protesters can be seen marching through Dezful and Mahshahr in the southwestern province of Khezestan, chanting “Death to Khamenei! Death to Raisi!” referring to Iranian President Ebrahim Raisi has promised to create jobs, lift sanctions, and rescue the economy.

Iranian state media has not publicly addressed the protests, but they have been covered by the National Council of Resistance of Iran, an opposition group. Footage shared by the NCRI shows protesters setting fire to a Basij military base in Jooneghan, a city in the Central District of Jooneghan county.

“Every so often we see these types of protests in Iran. Each time it is under a different premise – the price of eggs, the price of gas, the price of bread, but the underlining message which is supported by the slogans heard throughout the demonstrations is the same; they are protesting the entirety of a brutal regime,” Lisa Daftari, Iran expert and editor-in-chief of the Foreign Desk, said in a statement.

…click on the above link to read the rest of the article…

Where Will The Food Riots Start?

April 8, 2022

Where Will The Food Riots Start?

Global food prices have never risen so fast and have never been so high, and as have detailed multiple times in recent months (as this is not simply a one-month, ‘blame it on Putin’ crisis), most recently here, the pieces are in place for some serious tears to form in the social fabric of many nations.

While food prices may be generally seen as an emerging market problem, they will have an effect on developed markets too, something we will see in the upcoming French election.

And as the following table from Bloomberg Economics shows, while Pakistan is already in the midst of a political crisis and Egypt is already coming under financial pressure (along with Peru and Sri Lanka), the surge in food prices is also adding to problems in the developed world.

Nigeria, India, Colombia, Philippines, and Turkey all bear watching, along with Russia…

In fact, as PeakProsperity’s Chris Martenson details below, the inflation riots have begun. Peru and Sri Lanka both are experiencing violence as inflation spirals the prices of basic necessities higher and higher.

We’ve been here before, and recently.

The Arab Spring was a period of social unrest and riots in 2010 and 2011 that was triggered, in part, by spiking food costs.

As Alfred Henry Lewis said in 1906, “There are only nine meals between mankind and anarchy.”

But before pure anarchy comes, society experiences increasing unrest and the erosion of social bonds and niceties. That’s where we are now.

Food prices today are higher than they were in 2010, so the protests are not at all surprising. We can and should expect more of them.

Worse than that, however, is the prospect of actual famine and food shortages.

…click on the above link to read the rest of the article…

Food Supply Chains “Falling Apart” In Ukraine As “Imminent Famine” Risks Plague The World

March 19, 2022

Food Supply Chains “Falling Apart” In Ukraine As “Imminent Famine” Risks Plague The World

On Friday, Jakob Kern, an emergency coordinator at the United Nations (UN) World Food Programme (WFP), warned Ukraine’s food supply chains were collapsing as Russia bombed key infrastructures such as roads, bridges, and trains.

“The country’s food supply chain is falling apart. Movements of goods have slowed down due to insecurity and the reluctance of drivers,” Kern told a Geneva during a video conference from Krakow, Poland.

“Inside Ukraine our job is in effect, to replace the broken commercial food supply chains,” he added, describing the rebuilding task as a “mammoth” one.

Ukraine’s top agricultural export products are corn and wheat. Before the invasion, Ukraine was the second-largest supplier of grains for the European Union and one of the largest suppliers for emerging markets in Asia and Africa. Breaking down the numbers, Ukraine produced 49.6% of global sunflower oil, 10% of global wheat, 12.6% of global barley, and 15.3% of global maize.

Estimates via Black Sea research firm SovEcon show Ukraine’s 2022 corn harvest could plunge as much as 35% from 41.9 million tons last year to 27.7 million tons this year because of all the disruptions. Farmers are already reporting diesel and fertilizer shortages. Wheat harvests are also expected to decline. Some have even pointed total crop output in the country could be halved.

“With global food prices at an all-time high, WFP is also concerned about the impact of the Ukraine crisis on food security globally, especially hunger hot spots,” he said, warning of “collateral hunger” in other places like Egypt, Indonesia, Bangladesh, Pakistan, and Turkey that rely heavily on Ukraine imports.

All of this has fueled the UN’s Food and Agriculture Organization to warn global food prices could rise another 8-20% from current levels due to the deteriorating situation in Ukraine.

…click on the above link to read the rest of the article…

Cargill Ship Hit In Missile Attack In Ukraine Waters

February 25, 2022

Cargill Ship Hit In Missile Attack In Ukraine Waters

Star Tribune reports a vessel chartered by Cargill Inc., a Minnesota-based agribusiness giant, was hit in a missile attack after leaving a deep-sea port on the outskirts of Odessa on Thursday.

“Right now, our priority is the safety of our people in the region. This is a rapidly evolving situation with a great deal of uncertainty,” said April Nelson, a Cargill spokeswoman, in an e-mail. “We are currently gathering information and assessing potential impacts to Cargill and our customers.”

Cargill said that the crew was safe, and the vessel was rerouted to Romania to undergo a damage report.

Cargill has a majority stake at a port in the Odessa port, exporting grains and oils worldwide. The company didn’t name the vessel.

Since the attack on Thursday, Cargill implemented contingency plans as Russia invades Ukraine for the second day. Its plan is to concentrate on guaranteeing its global customers’ food supplies.

Ukraine and Russia account for 25% of global trade in wheat and 20% of corn sales. With port and railway closures in Ukraine, Bloomberg Agriculture Spot Index has risen to record highs.

This will feed into food inflation as global food prices will jump to a record next month or sometime in the first half of this year.

Food inflation plagues global consumers and is about to worsen as spot agricultural commodity prices soar to record highs amid new supply chain disruptions.

Global food prices rose ‘sharply’ during 2021

January 11, 2022

Global food prices rose ‘sharply’ during 2021

A rwandese farmer holds a handful of beans after the harvest.

The UN’s benchmark food and commodity prices index rose sharply on average through 2021, compared with the previous year, the Food and Agriculture Organization (FAO) informed on Thursday.

The agency’s Food Price Index, which tracks monthly changes in international prices, averaged 125.7 points – a 28.1 per cent increase over 2020.

FAO Senior Economist Abdolreza Abbassian explained that, normally, high prices are expected to ease as production increases to match demand.

This time, however, the consistently high cost of inputs, the ongoing global pandemic and ever more volatile climatic conditions “leave little room for optimism about a return to more stable market conditions even in 2022.”

Year’s end

At the end of the year, world food prices fell slightly, as international prices for vegetable oils and sugar fell significantly, the data shows.

The Food Price Index averaged 133.7 points, a 0.9 per cent decline from November, but was still up 23.1 per cent from the same month the year before. Only dairy posted a rise that month.

The Cereal Price Index also decreased 0.6 per cent; for the full year, however, it reached its highest annual level since 2012, rising 27.2 per cent.

Biggest gainers were maize, up 44.1 per cent, and wheat, gaining 31.3 per cent. One of the world’s other key staple foods, rice, lost 4 per cent.

Oil and sugar

The Vegetable Oil Price Index declined 3.3 percent in December, due to lower global import demand, that may be linked to concerns over the impact of rising COVID-19 cases, which have led to delays in the supply chain.

For the year as a whole, the Oil Index reached an all-time high, increasing 65.8 per cent compared with 2020.

Another key staple, sugar, dropped by 3.1 per cent last month from November, reaching a five-month low.

…click on the above link to read the rest of the article…

Fertilizer Inflation Contributing to Higher Food Prices

December 31, 2021

Fertilizer Inflation Contributing to Higher Food Prices

Food prices are expected to rise going into 2022, and one major contributing factor is the rising price of fertilizer. The American Farm Bureau Federation stated that all nutrients had risen dramatically in cost over the last year: ammonia has increased over 210%; liquid nitrogen has increased over 159%; urea is up 155%; MAP has increased 125%; DAP is up over 100%, and potash has risen above 134%. This does not include the growing cost of transportation.

Due to growing global demand, the US exports 44% of all fertilizer materials made domestically. Six specific crops generate two-thirds of fertilizer demand: corn (16%), wheat (15%), rice (14%), vegetables (9%), fruits (7%), and soybeans (5%). In the US, corn requires 49% of all fertilizer, with wheat accounting for 11% and soybeans 10%.

The American Farm Bureau Federation expects demand and prices to remain high into the spring season. As a result, farmers are increasingly shifting to crops that require less fertilization. The prices for these nutrients are so high that many farmers will be lucky to break even on costs. As always, these costs will be passed on to the consumer. Expect foods, especially those requiring a higher level of fertilization, to go up in the new year.

Extreme weather and pandemic help drive global food prices to 46-year high

December 8, 2021

Extreme weather and pandemic help drive global food prices to 46-year high

Current high food prices, combined with the ongoing pandemic, will make the global food supply highly vulnerable to extreme weather shocks in 2022.

Hurricane damage — Aerial view of stranded barges along the Mississippi River in Louisiana, on August 30, 2021, in the wake of category 4 Hurricane Ida. The hurricane significantly disrupted transport of grains and fertilizer in September, contributing to high global food prices. (Image credit: Congressman Garret Graves (R-La), Ranking Member of the House Select Committee on the Climate Crisis)

Global food prices in November rose 1.2% compared to October, and were at their highest level since June 2011 (unadjusted for inflation), the United Nations Food and Agriculture Organization (FAO) said in its monthly report on December 2. After adjusting for inflation, 2021 food prices averaged for the 11 months of 2021 are the highest in 46 years.

The high prices come despite expectations that total global production of grains in 2021 will set an all-time record: 0.7% higher than the previous record set in 2020. But because of higher demand (in part, from an increased amount of wheat and corn used to feed animals), the 2021 harvest is not expected to meet consumption requirements in 2021/2022, resulting in a modest drawdown in global grain stocks by the end of 2022, to their lowest levels since 2015/2016.

The November increase in global food prices was largely the result of a surge in prices of grains and dairy products, with wheat prices a dominant driver. In an interview at fortune.com, Carlos Mera, head of agri commodities market research at Rabobank, blamed much of the increase in wheat prices on drought and high temperatures hitting major wheat producers including the U.S., Canada, and Russia.

…click on the above link to read the rest of the article…

‘I’m afraid we’re going to have a food crisis’: The energy crunch has made fertilizer too expensive to produce, says Yara CEO

November 5, 2021

‘I’m afraid we’re going to have a food crisis’: The energy crunch has made fertilizer too expensive to produce, says Yara CEO

The world is facing the prospect of a dramatic shortfall in food production as rising energy prices cascade through global agriculture, the CEO of Norwegian fertilizer giant Yara International says.

“I want to say this loud and clear right now, that we risk a very low crop in the next harvest,” said Svein Tore Holsether, the CEO and president of the Oslo-based company. “I’m afraid we’re going to have a food crisis.”

Speaking to Fortune on the sidelines of the COP26 climate conference in Glasgow, Holsether said that the sharp rise in energy prices this summer and autumn had already resulted in fertilizer prices roughly tripling.

In Europe, the natural-gas benchmark hit an all-time high in September, with the price more than tripling from June to October alone. Yara is a major producer of ammonia, a key ingredient in synthetic fertilizer, which increases crop yields. The process of creating ammonia currently relies on hydropower or natural gas.

“To produce a ton of ammonia last summer was $110,” said Holsether. “And now it’s $1,000. So it’s just incredible.”

Food prices have also risen, meaning some farmers can afford more expensive fertilizer. But Holsether argues many smallholder farmers can’t afford the higher costs, which will reduce what they can produce and diminish crop sizes. That in turn will hurt food security in vulnerable regions at a time when access to food is already under threat from the COVID-19 pandemic and climate change, including widespread drought.

The company, whose largest shareholder is the Norwegian government, has donated $25 million worth of fertilizer to vulnerable farmers, Holsether said. But Yara isn’t able to eat the costs of such a dramatic rise in energy prices, he says…

…click on the above link to read the rest of the article…

Global Food Prices Hit Fresh Decade High In October

November 5, 2021

Global Food Prices Hit Fresh Decade High In October

In October, global food prices continued climbing higher for the third straight month, hitting fresh decade highs, led by vegetable oils and cereals. Higher food costs contribute to more inflationary pressures for the working poor, central banks, and governments.

The UN’s Food and Agriculture Organization’s food price index, which tracks a basket of food commodities, averaged 133.2 in October, up 3.9 points (3%) from September and 31.8 points (31.3%) from October 2020. The index has risen three consecutive months and is now at a new decade high (could hit record highs in 2022).

World vegetable oil and cereal prices were the two biggest movers in the index. Edible oils jumped 9.6% on the month to set a record high. Cereal prices rose 3.2%, within the basket, wheat jumped 5%.

A combination of bad weather in the Americas, higher shipping costs, and labor shortages have disrupted global food supply chains. The latest energy crunch has sent fertilizer prices sky-high and will increase food prices in 2022.

“The issue with the inputs and fertilizers and its implications for next year’s crop is a concern,” said Abdolreza Abbassian, a senior economist at the UN’s Food and Agriculture Organization.

“By now, the market has factored in most of the supply and demand issues. But the market has by no means factored in next year’s prospects in production,” said Abbassian.

He warned: “We cannot afford a bad year in 2022 for important crops.” This has reignited memories of food price spikes a decade ago which caused unrest in emerging market economies. SocGen’s Albert Edwards first warned that soaring food prices could contribute to socio-economic destabilization right before the virus pandemic began.

…click on the above link to read the rest of the article…

Global Food Prices Set To Soar As The Oil And Gas Crunch Continues

October 27, 2021

Global Food Prices Set To Soar As The Oil And Gas Crunch Continues

Oil and gas prices have risen dramatically this year as a result of underinvestment and recovering demand.
Higher fuel prices are weighing on global food supply chains, with transportation and farming costs continuing to climb.
The hardest hit will, once again, be those living in developing economies that are still struggling to recover from the impact of the pandemic.

The potential for a knock-on effect of rising fuel prices to be felt by other industries is becoming more likely, as oil and gas prices continue to rise to an all-time high, companies are finding it hard to maintain their costs and may have to shift this burden to the consumer any day now.

Petrol prices have risen higher and higher this year, as oil makes a comeback in 2021 following a difficult year of pandemic restrictions and low demand. This has, of course, been aided by the OPEC+ curbs on production that restricted oil output across member states for the first half of 2021. And while production levels are slowly rising, some countries are finding it difficult to reach new OPEC targets as they revive their oil and gas industries, meaning the global shortage continues.

Looking at the price of gasoline over the last 20 years, you can see that the global average has doubled, from $0.60 a litre in 2001 to $1.20 a litre today. This year, in particular, the increase in demand as economies open back up following over a year of restrictions, added to a supply shortage across much of the world, means prices are nearing an all-time-high.

…click on the above link to read the rest of the article…

Corporate Greed the ‘Real Culprit Behind Rising Prices,’ Researchers Say

October 22, 2021

Corporate Greed the ‘Real Culprit Behind Rising Prices,’ Researchers Say

“The more sway mega-corporations have over our economy, the more power they have to gouge customers, squeeze Main Street, and exploit workers.”

Amid mounting data showing that people are paying more for food at grocery stores around the United States, a new analysis out Wednesday reveals how corporate power is “the real culprit behind rising prices at the checkout line.”

“Addressing this crisis means recognizing these price increases for what they are: the result of deeply entrenched concentrated corporate power.”

After the U.S. Labor Department announced that the Consumer Price Index increased by 0.4% in September, researchers at the Groundwork Collaborative, a progressive think tank, explained the connections between “price hikes, monopoly, and corporate greed.”

“The more sway mega-corporations have over our economy, the more power they have to gouge customers, squeeze Main Street, and exploit workers,” Rakeen Mabud, chief economist at the Groundwork Collaborative, said in a statement.

Since September 2020, food prices overall have increased by 4.6%, with the price of meats, poultry, fish, and eggs surging the most over the past 12 months, at 10.5%.

The higher inflation rate in those industries, researchers noted, can be attributed to decades of consolidation, which has given a handful of corporations an ever-greater degree of market control and with it, the power to set prices.

According to the Groundwork Collaborative:

Just four meat processing conglomerates control more than 80% of the beef industry and more than 60% of the pork industry. This enables them to dictate prices that both flatten returns for farmers and ranchers and inflate prices for consumers at the meat counter. As a result, consumers have seen a 12% increase in the cost of beef and a nearly 10% increase in the cost of pork over the last year…

…click on the above link to read the rest of the article…

China Export Curbs On Fertilizer Could Worsen Global Food Price Shock

October 20, 2021

China Export Curbs On Fertilizer Could Worsen Global Food Price Shock

China’s move to impose export restrictions on fertilizers will be felt worldwide. Beijing’s increased scrutiny comes as global fertilizer markets have been battered by plant shutdowns and skyrocketing prices that may continue to boost food inflation well into 2022. Chinese Communist Party officials have called for stable fertilizer supplies and food security amid overseas turmoil.

On Oct. 15, Beijing implemented a new rule requiring additional inspection of fertilizer exports. The General Administration of Customs added new inspection requirements on urea to ammonium nitrate, according to Bloomberg.

Last month, a statement published on WeChat by the National Development and Reform Commission, China’s top economic planner, urged local authorities to ensure stable prices by keeping fertilizer plants operating despite widespread power cuts. This call for adequate fertilizer supplies is critical for the country to sustain agricultural production amid mounting food security risks.

Despite export curbs, Urea futures in Zhengzhou recently hit a new record high.

Bloomberg sources said some recent Chinese fertilizer cargoes had been delayed by customs for additional checks to obtain new export certificates. They said some shipments would be rerouted for domestic markets or face further delays.

A reduction in exports from China (a country that controls 30% of the global fertilizer market) could cause shortages in India, Pakistan, and Southeast Asia, the biggest buyers of its fertilizers. Higher prices could force farmers to plant less and or have to raise crop prices. The UN’s global food tracker is at a new decade high and may continue to soar higher.

Signs of a fertilizer shortage have already emerged. Europe may face difficulties sourcing fertilizer supplies at multiple domestic plants that have shuttered or reduced the output of the nutrients because of high natural gas prices. China’s export restrictions will make it harder for the euro area to import supplies…

…click on the above link to read the rest of the article…

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