Food prices are generally increasing. We’re hearing that Oregon is getting hit with some remarkably steep increases in food prices. Why is this so?
Nationally, meat prices are projected to increase by something like two to three per cent in the coming months. Egg prices may be dropping, but dairy prices are projected to increase at the same rate meat prices are. Fresh fruits, cereals and bakery products may easily see price increases of five to seven per cent. Sea food price increases are projected to be as high as four per cent.
It seems that some typical food prices in Oregon shoot somewhat over average national prices and some fall below national averages. A head of lettuce in Oregon, for instance, costs as much as 56 cents more than the national average price. Orange juice, on the other hand, can be as much as 75 cents less than the average national price. White bread can cost as much as $1.60 more in Oregon than elsewhere. Fresh whole chicken here books in at 52 cents below the national average price. Ground beef can be almost $1.60 more per pound here in Oregon than the national average price.
Oregon produces lettuce, dairy products, bread, eggs, chicken and beef and we’re not far from orange-producing areas. Transportation costs, including fuel prices, to markets must be relatively low. Oregon is a state where retailers like Les Schwab use "free" Oregon meat to draw in business. Wage rates in agriculture-related industries are low and unemployment is over 5 per cent in Oregon; wages for most workers are unlikely to increase significantly any time soon. We can't blame the price increases on long distances, transportation or wage increases.
In tough times, people often turn to cheaper sources of protein and low-end foods. We assume that a simple supply-and-demand process exists here, but it doesn't. There seems to be an increasing demand for eggs, for instance, but the price of eggs is dropping and is projected to continue to drop.
There is no shortage of supermarkets and big box stores here, even with the Albertson’s closings. Fast food—also apparently booming in Oregon—probably gives the supermarkets a run for the money, especially for poor people’s money. The theory that competition eventually drives prices down by itself would not seem to apply here.
It stands to reason that technological change would lower the cost of food production and that this would show up in lower or stable prices. For all of the GMO development, new fertilizers, development and diversity of products in the dairy industry and the free research ride agribusiness gets through state university systems we are still not seeing lower or stable food prices. The relative costs of food production related to technological development are probably dropping, however.
The argument that resources and foodstuffs are being "diverted" to other international markets incorrectly assumes that there are natural and necessary limits to food production and that markets must compete under conditions of scarcity for necessary items. Since this is not so, we cannot blame scarcity or other countries for high food prices here in Oregon.
So—why the price increases?
It’s probably true that farmers and agribusiness are deciding, as a matter of policy, not to increase laying flocks, that increasing fuel costs have some part to play, that feed prices are up and that more corn crops are being diverted for ethanol production. We have seen a shift in the Willamette Valley towards labor-intensive nurseries on farmland and away from edible crops. The passing housing boom has meant less farmland overall here, straining food production. It may also be true that agribusiness is unable to attract low-wage workers given the recent anti-immigrant legislation. These reasons all reflect choices that capitalists make in the marketplace—seemingly rational choices based on a need and struggle to maintain a rate of profit--and forces and events that they come up against.
But, bottom line, I think that the capitalists are making another fundamental choice which is not being discussed in the media. Wherever and whenever possible, the capitalists are increasing agricultural production or, through competition, are maintaining surpluses and temporary shortages while either maintaining wages at their current levels or actually cutting pay. Through competition, the food retailers are slowly centralizing their economic power and seeking to boost sales while cutting or maintaining labor costs as well.
Actual food production costs may not be stable, and they are not dropping uniformly, but I think that it's a safe bet that there is at least a general drop in agribusiness production costs. This drop may be offset, or not, for agribusiness by the movement of other commodities, including the cost of labor power. So it is that we see this relentless drive to build more big box stores and we watch as these corporations affect and then play a determining role in how food is produced and at what cost.
The cost of food will eventually settle at its value. In turn, the cost of food will help set the value of labor, or wages. We know what a minimum wage is, but we cannot know what a minimum profit is. The maximum rate of profit is determined by the (relative) minimization of wages and the (relative) increase or prolongation of working hours; this elasticity established under capitalism in the relationship between labor power, wages and profits insures a class struggle. We're in for a bumpy ride.