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Fuel prices are down why not the cost of food ?

Right now diesel prices, the fuel that moves our food from the Farm and Factory to our Market ( and eventually to our table ) is the same price as a gallon of regular gasoline (and That is about $2.50 a gal. In My area) why is it that when fuel prices go down the high cost of food still remains the same or goes higher? it doesn t make any sense that. Couldn t regulate the cost when lower shipping is available to help the consumer and not be so greedy! what do you think ?

4 Answers

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  • JuanB
    Lv 7
    6 years ago

    For one thing, food shipping today at lower gas prices, was grown and harvested using farm equipment such as tractors running on high priced gas for the last 6 months. Then fuel is only one costs, wages, insurance, fertilizer, feed and other costs tend to also go up, not down. Keep in mind a lot of places have had changing weather patterns and half the crop could be at risk. Then for the same cost to grow, the farmer has half the crop.

  • 6 years ago

    Food prices are not driven by the cost of fuel (or any other cost for that matter) at least in the short-term. It's driven by supply and demand (at least at the wholesale level). Prices are sometimes quite profitable for farmers, other times, they are below production costs. Over the long run, they do tend to correlate relatively closely to cost-of-production, so long term changes do affect price.

    Right now each commodity has it's own story, but here are a few things that are driving food prices:

    beef: The US beef herd is at its lowest level since the 1960's, and both domestic and export demand are strong, so prices are in record territory.

    poulty/eggs: H5N2 bird flu is wiping out a big portion of the flock. High prices.

    dairy: prices have crashed (fallen dramatically). Last year was a record year, this year, most dairy farmers will be lucky to break even.

    pork: PED virus is waning, supply is recovering, price is falling

    grains: supply up, price is falling.

    overall: as the world moves toward 9 billion mouths to feed, and incomes in the developing world rise, it brings more people into the global middle class, and they are demanding improved (higher protein) diets. So the long-term trend is for food prices to rise.

    At retail:

    Retail prices are what they call "sluggish" and "sticky". In other words, slower to move, but when they do move, they tend to "stick". So you don't see the wild ups and downs of commodity markets at the grocery store. For example, last year, when milk prices were in record territory, retail prices were slower to increase, and when they did rise, went up less (as a %) than wholesale prices, but now that the price has fallen the retail prices have mostly held. It has more to do with competition among retailers than the price of fuel.

    So, it's markets. But human nature being what it is, we usually want to have a tangible "reason" why things happen.

    I know that's perhaps not as satisfying as saying "X" cost is up, so my eggs cost more, but that's the dynamic...

    Source(s): I'm an agricultural economist
  • Anonymous
    6 years ago

    Fuel cost is not the only cost to produce and delivery foods to people. It depends also on unpredictable weather.

  • 6 years ago

    Even so, Food still cost way too much for the majority of American families having to survive on mediocre wages :(

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