According to Elise Golan, the Director of Sustainability at the U.S. Department of Agriculture, some of the cost is because of the way that we are getting the food from the grocery store. High density cities, where people took the virus very seriously went all in on pick-up or delivery groceries. This behavior required a labor shift from stores, especially as so many who did try these delivery services in the early days of quarantine found them inadequate. And grocery store workers needed to have PPE supplied and other safety practices that cost money, much of which got passed along to us in our food costs. It surprises me that, according to reports, not that many people used the dedicated app-based grocery services like Instacart. Amazon was the e-grocery store of choice, especially among younger shoppers.[2]  Now that Amazon warehouse laborers are protesting the working conditions, I wonder if these younger, supposedly “woker” younger shoppers will shift where they spend their grocery dollars.

Some of the higher prices is no doubt still due to the disruption in the food supply chains. We still have the situation where school and restaurant closures, the near-absence of hotel traffic, and the closure of many other public institutions with their own cafeterias and snack bars means that nearly every food distributor is having to change their delivery structures to send more food to the grocery stores where people are buying food. They also have to change how they package food, which means changing factory machinery. We also still have some farmers who are destroying supplies, either because they have no way to get their goods to their buyers or because they are trying to hike up prices. According to Meat+Poulty, only 17% of the meatpacking plants that closed back in May have reopened, mostly because workers are still getting sick.[3]

History has shown again and again that in moments of crisis, when you need quick mobilization of vast resources and people, capitalist systems struggle to adapt. Back in 1941, when the Germans invaded the Soviet Union and the Japanese attacked the United States, the centralized economy of the Soviet Union made it possible for them to uproot entire factories almost overnight, move them to the hinterlands beyond the Ural mountains, and put them back together. They did this while the Germans were invading their homeland, destroying cities, and killing millions. In contrast, the United States was slow to switch to a war footing, even with the advantage of not having enemies on their home soil. Each factory had a separate owner with whom negotiations and incentives were required to switch to war production. Eventually, the United States adopted a centralized infrastructure, forcing Detroit car makers, for instance, to switch to tank production. America’s food supply represents millions of farmers, processors, factory owners, and distributors, all of whom have to adjust individually to the new normal. None of them have stored extra food for a rainy day or put down plans for such an eventuality—that is something that a state-run system would do. The whole chain is so brittle that when disruption like this comes along, only gigantic corporations, who function like states, can adjust by scaling up or down production, using their leverage with banks and even governments to keep afloat.

Or maybe, capitalism is working just like it is supposed to under the circumstances. There is no question that people in the grocery world are making a lot of money. Food companies continue to show historic profits. B&G foods, saw a 38% increase in sales in the second quarter of this year. Nestle and Pepsi have stayed in the black. The grocery stores are also making money. Publix saw a second quarter increase of $1.94 per share this year, in contrast to the $.92 they saw last year. Their sales have jumped 20%.[4] It seems fair to say that they are all passing their increased costs along to consumers like me, sitting in the checkout line, thinking about why my ground beef has tripled in price. I wonder sometimes if they are hiking their prices because know they can and we will still buy. I don’t feel safe going to restaurants even now, so the grocery store gets all my business. The only work around now is to buy as much as I can from food consignment shops like Big Lots. Others are waiting in line at food kitchens.

Notes

[1] United States Census Bureau, “Business and Industry: Time Series / Trend Charts – 44X72: Retail Trade and Food Services,” Census.gov, n/a, https://www.census.gov/econ/currentdata/dbsearch?program=MRTS&startYear=2019&endYear=2020&categories=44511&dataType=MPCSM&geoLevel=US&notAdjusted=1&submit=GET+DATA&releaseScheduleId; Liam O’Connell, “Monthly Food and Beverage Store Sales U.S. 2020,” Statista, July 20, 2020, https://www.statista.com/statistics/805047/food-and-beverage-store-sales-us-by-month/; USDA, “Summary Findings-Food Price Outlook 2020,” United States Department of Agriculture – Economic Research Service, July 2020, https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings/.

[2] Blake Droesch, “Five Charts: How Coronavirus Has Impacted Digital Grocery,” eMarketer, May 12, 2020, https://www.emarketer.com/content/five-charts-how-coronavirus-has-impacted-digital-grocery.

[3] Sam Danley and Ryan McCarthy, “Map: COVID-19 Meat Plant Closures,” Meat+Poultry, July 6, 2020, https://www.meatpoultry.com/articles/22993-covid-19-meat-plant-map.

[4] Russell Redman, “Sales at Publix Jump 20% in Second Quarter,” Supermarket News, August 3, 2020, https://www.supermarketnews.com/retail-financial/sales-publix-jump-20-second-quarter.