To the Bermuda community,
So far, the year 2021 has resulted in a sense of uncertainty across the globe. The ongoing COVID–19 pandemic, the change in political leadership in the US and the ensuing economic policy changes, the Suez Canal blockage, the seismic shift to remote working and, more recently, the pipeline hacking are just a few of the things impacting all of us in ways never imagined.
Unfortunately, this impact will continue and cause ripples, much like a rock thrown in a lake. One of these ripples is that the price for food is increasing. This is due to a variety of increasing costs: for base materials used in manufacturing food, for manufacturing food packaging, labor shortages, transportation challenges, and currency fluctuations. Together, they all compress the food market and contribute to an expected surge in prices, only expected to further increase over the coming months.
The COVID pandemic continues to hamper product and labor supply such as truck drivers and factory workers across the US; additionally, drought conditions are increasing feed prices for animal farms. With the demand for meat expected to stay strong, meat prices are the first in many price increases across the industry. Since the beginning of the year beef prices have risen by 40 percent and are forecast to rise another 15 percent.
Similarly, pork prices are over 50 percent higher and expected to remain high through the summer. Chicken prices have doubled but will hopefully begin to decline in mid–summer as the supply begins to increase. The USDA is predicting only moderate gains in production and in some cases, such as beef, a reduction in year–over–year production. (https://www.ers.usda.gov/topics/animal–products/cattle–beef/market–outlook/) From the basic concept of economics, if demand for a product stays high, the price will increase, a trend we have certainly seen over the past few weeks.
Throughout the pandemic, many people have shifted towards remote working and also shifted from the city life to a country location. This movement has put a resulting pressure on the lumber market as remote workers build residences in the country. “Lumber prices have skyrocketed more than 300 percent since April 2020”.
(https://www.nahb.org/news–and–economics/housing–economics/national–statistics/framing–lumber–prices) Wood used to build pallets for shipping goods are a byproduct of the lumber market, and pallet charges are being added to deliveries. In addition to lumber for pallets, the price of cardboard, also a wood–based product, has gone up over 10 percent.
US policy decisions have led to an increase in oil prices and shortage of workers, both of which affect our
grocery prices in Bermuda. The price of plastic packaging has almost doubled in cost with the rise in oil
prices. Also, logistical challenges related to a shortage of available drivers to move cargo has also meant
the cost of moving both raw materials and finished product has gone up significantly. For the first time
in recent memory, we are experiencing some minor delays as shipping companies are unable to procure truck drivers to meet our delivery times.
The increased costs of these factors among others regrettably translates to a steady increase in the cost of supplying Bermuda with all types of food products. Recent US news has reported on increasing inflation; inflation is hitting every community across the United States. This trend is also being felt here at home. Sadly, Bermudian retailers and wholesalers have no control over both the inflation and increased costs. As much as we strive to keep the costs of food as low as possible, it is unavoidable that these increased costs will impact the retail trade in Bermuda. Looking to Europe for supplies will not help either as inflation in Europe and a strong British pound make shipping out of England more expensive.