Inflation Impact on Agriculture Driving Up Food Prices
LANCASTER COUNTY – Higher costs for everything from fuel and labor to equipment and supplies are challenging all segments of the state’s agriculture industry to continue putting food on people’s tables, members of the House Majority Policy Committee were told during a hearing Wednesday.
“As someone who grew up on a dairy farm, I know farmers are no strangers to difficult times, but something has to give,” said Rep. Martin Causer (R-Cameron/McKean/Potter), chairman of the committee. “These men and women are working hard to continue producing our food despite being crushed by high inflation. We need to do all we can policy-wise to help ease that burden.”
Wednesday’s hearing was the fifth one held by the committee to look at various aspects of inflation on business and consumers.
“We’ve heard a number of common themes throughout these hearings, including labor and regulatory costs, but it always seems to come back to energy being at the root of the problem,” Causer said. “It doesn’t make sense to sit by and watch fuel prices skyrocket when we have the resources to generate so much energy right here at home.”
Bill Beam, president and owner of Beam Farms Inc. in Elverson, Chester County, said his fuel costs are up $65,000 over last year.
“You can point all the fingers you want…it’s energy costs,” Beam said in response to assertions that inflation is driven by so-called corporate greed. “Energy costs drive everything. We used to worry about what the price of gold is. I’m more worried about the price of a barrel of oil That really is what sets the tone for our whole country.”
Chris Pierce, president of Heritage Poultry Management Services in Lebanon County, agreed. He noted the poultry farms he works with have already made changes to their operations to be as efficient as possible. It’s time for the nation to do more to build energy independence.
“We need to produce the energy here today to make it more affordable and more attainable,” he said.
For trucking companies like Good Transport Services, which primarily handles the delivery of feed and feed ingredients, they find their fuel surcharges (FSC) aren’t keeping pace with actual cost.
“Most of our customers dictate the FSC to use. Their FSC is based on over the road (OTR) fuel mileage, while our deliveries take us on a mix of roads,” said Daniel Good, former CEO. “From your own experience you know that urban and rural driving takes more gas or fuel than does open road driving. Also, our trucks use the engine to unload the bulk feed cargo further lowering our miles per gallon. Consequently, as the fuel price rises, the FSC reimbursement falls farther and farther behind our actual fuel cost.”
Good also pointed to a rise in the cost of equipment. “New truck pricing is up almost 16%. The same truck a year ago now costs $37,000 more,” he testified. “The cost of tires has risen 39%. The cost of brake drums has increased 25%. Even oil and filters are up more than 10%.”
Heather Lewis, who runs a family farm with her husband in Mount Joy, compared dealing with today’s inflation to a rachet strap. “As we look at our inputs to our crop, we are seeing an increase of 25%. And in talking with our suppliers for those inputs, they are expecting at least another 5% going into next year’s crop,” she said. “Therefore, we tighten the strap.”
Beam, of Beam Farms Inc., also highlighted the skyrocketing costs of crop inputs, including a near 100% increase in the price of nitrogen from $320 per ton in 2021 peak season to $625 per ton in 2022 peak season. Similarly, products applied to maintain phosphorous levels have increased by 50% over last year and potash by 87%.
“When they talk about inflation of 8% or 12%, you can see it doesn’t even come close to what we’re experiencing,” he said.
Issues with hiring and labor costs were also referenced by several testifiers. “The final and probably largest impact of inflation on our business is the hiring and retention of skilled labor. The single greatest expense to our business is labor, and in the past year we have had to increase wages for our team by approximately 10%,” said Mike Smucker, president of Smucker’s Meats.
Doug Taylor, founder and CEO of Taylor Chip Cookie, agreed finding workers to help his business keep up with demand is the biggest challenge he faces. “The first half of the year, our projections were, just about, cut in half. We struggled to find the staff needed to produce our cookies, which we ship nationwide. At some points, our fulfilment has been up to 3 weeks out due to not have the staff to keep up with demand,” he testified. “For us, this meant that we had to turn off advertising and actively stop trying to bring in new customers.”
To view the hearing or read submitted testimony, visit
pagoppolicy.com.
Representative Martin T. Causer
House Majority Policy Committee Chairman
67th District, Pennsylvania House of Representatives
Media Contact: Patricia A. Hippler
717.772.9846
phippler@pahousegop.com
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