FMI's Sarasin: Rising Food Prices Don't Tell the Whole Grocery Story

Amid animated discussion about rising inflation at the grocery store—its roots as well as its remedies—one thing often gets overlooked, panelists at an FMI–The Food Industry Association webinar said Feb. 10: Americans' grocery dollar goes further than it used to.

"Food is more affordable now than it was a generation ago, and it's important that people know that," Ricky Volpe, associate professor of agribusiness at California Polytechnic State University, said in the webinar, which focused on building resiliency within the food industry. "Your dollar is going further to buy food to feed your family to meet dietary guidelines than it did 20 years ago."

That's in no small part due to investments players throughout the food supply chain have made in efficiency—specifically, via process automation and smarter, faster data analysis—that help growers, producers and retailers get products to market faster and (usually) at the right time, Volpe and FMI President and CEO Leslie Sarasin said. But much room remains to innovate and automate further, as through wider use nationwide of indoor farming, Volpe suggested. And on the flip side, the COVID-19 pandemic has demonstrated a need for a balanced supply-chain management strategy: away from the years-long drive toward "just-in-time" inventories, Sarasin said, and more toward "just in case," at least for some items, pricier though that approach may be. 

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"Yes, COVID-19 was a shock," Volpe said, "but I think it really served to shine a light on longer-term issues that had been affecting the food supply chain." Shortages of truck drivers and struggles recruiting and retaining manufacturing workers predate the pandemic, he noted. Effectively addressing those will take a combination of both further automation—where it can provide the most value and biggest health and safety benefits vs. manual labor—and an emphasis on career development opportunities for those employed in production, transportation and retail itself, he suggested.

For the here and now, consumers can expect to see grocery prices continue to rise as wide-ranging supply-chain challenges persist, Sarasin said. In addition, everything from extreme weather events to continued port backups, shortages of packaging materials and labor challenges mean that supply-chain woes are likely to persist in the short term, too, she said.

"Everything put together, in short, equals slowdown," she said, noting that lead times on many products grocery retailers depend on have been delayed anywhere from eight to 12 weeks. Still, a waning of the COVID-19 pandemic is likely to ease challenges within the transportation system, helping get the healthy product inventories that are out there where they need to go, she said.

Consumers still enjoy eating at home and appreciate the "normalcy" that a trip to the grocery store has provided during the pandemic, said Sarasin. For retailers, continued investments in making supply chains more efficient and the grocery shopping experience more convenient in stores and online will position their stores for success in a changing—and still disruption-prone—environment.