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As Americans are spending more, farm groups should explain why.

Tim Hearden, Western Farm Press

March 14, 2024

2 Min Read
Burgers.USDA ARS

Jamie Levitt of California State University, Fresno is doing research on a subject that should strike a chord for consumers and growers alike. As we reported recently, Levitt is looking into how perceptions of price gouging mesh with reality when it comes to the retail pricing of food.

The issue is that consumers feel cheated by the rapidly escalating inflation they encounter in restaurants and grocery stores. They’re flustered by seeing different prices for the same items depending on whether they chose to install a vendor’s app on their phones or what time of day they shop or eat.

One example of this frustration was in the news recently, as Wendy’s restaurants announced they would begin using “dynamic pricing” with new digital menu boards that could change the prices of items based on demand at different times of day.

The company clarified a few days later after a consumer backlash, saying it doesn’t plan to implement “surge pricing” but that the menus could allow it to offer discounts at slower times of the day.

But Wendy’s is hardly alone in struggling to find ways to offset their own skyrocketing costs of doing business. Other national chains have taken heat for prices, too, with one commenter on social media declaring, “Fast food is becoming a luxury item for Americans.”

The truth is that while consumers aim their ire at retailers for raising prices, costs are rising at every step of the food supply chain, thanks in no small part to rising payroll costs mandated by government entities that also enforce a slew of regulations that leave business owners themselves feeling gouged.

Increases in the minimum wage in many states are leading to significant financial challenges for independent restaurant owners, notes the United Business Journal. Nowhere is that more evident than in California, which lifted its minimum wage for fast-food workers to $20 an hour effective April 1.

It isn’t hard to fathom the impact that these cost increases could have on the demand for farm commodities used in fast food, particularly beef and chicken. All one has to do is remember what happened in 2020, when pandemic-inspired restaurant closures devastated entire industries in agriculture. Whether a restaurant is closed or its prices are too high, the result is the same for many families: no fast food.

Yet when Assembly Bill 1228 mandating the wage increase was being debated last year in the California Legislature, no farm groups were listed in Assembly and Senate bill analyses as having taken a position on the bill.

As Americans are now spending a higher percentage of their income on food than at any point since the first Gulf War, agriculture should begin a conversation with them about the degree to which mandates and regulations are contributing to those rising costs.

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