Why Your Food is SO Expensive Now

00:26:56
https://www.youtube.com/watch?v=wyo1u9WxUG4

Ringkasan

TLDRThe video explores the significant rise in grocery prices, attributing it to supply chain shocks, climate issues, and corporate profit manipulation. It traces the journey of food from production to grocery stores, highlighting the complexities of the food supply chain and the role of corporations in driving prices up. Historical context shows a decrease in food spending as a percentage of income over time, but recent trends indicate a reversal due to various crises. The video calls for government intervention to ensure affordable food for consumers, citing successful programs in other countries.

Takeaways

  • 📈 Grocery prices have surged by 13% annually.
  • 💰 Corporations are making record profits amid rising prices.
  • 🌍 The food supply chain is complex and global.
  • 📉 Historical spending on food has decreased over time.
  • ⚖️ Corporate consolidation reduces market competition.
  • 🌱 Climate change impacts food production and prices.
  • 🚨 Supply chain shocks contribute to price increases.
  • 📊 Companies can raise prices without losing demand.
  • 🛒 Government intervention can help regulate food prices.
  • 🥚 Egg prices soared due to bird flu, benefiting producers.

Garis waktu

  • 00:00:00 - 00:05:00

    The video discusses the rising grocery prices, highlighting a significant increase from the usual 1-2% to around 13% annually. It attributes this to various factors, including COVID-19 and inflation, but suggests that corporate profits and the food system's structure play a larger role. The narrator aims to explore the complexities of the food system and the corporations behind it, seeking to understand their influence on rising prices.

  • 00:05:00 - 00:10:00

    The historical context of food trade is presented, tracing back to ancient civilizations that began growing surplus food and trading it. This trade evolved into a global system, leading to technological advancements and the establishment of a global economy post-World War II. The narrator emphasizes how this interconnectedness has transformed trade, making it more efficient but also fragile, as seen in the current food pricing crisis.

  • 00:10:00 - 00:15:00

    The video contrasts local and global food supply chains, using tomatoes as an example. It details the journey of tomatoes from Mexico to the U.S., highlighting the logistical challenges and costs involved. The narrator points out that despite the complex journey, imported tomatoes can be cheaper than locally sourced ones, raising questions about the food system's pricing mechanisms and the role of supply chains in food costs.

  • 00:15:00 - 00:20:00

    The narrator introduces the concept of supply chain shocks, explaining how disruptions at any point in the food supply chain can lead to increased prices for consumers. Various recent events, including climate issues and geopolitical conflicts, are cited as contributing factors to these shocks, which have made food prices more volatile and unpredictable.

  • 00:20:00 - 00:26:56

    The video concludes by addressing the role of corporate profits in rising food prices, suggesting that companies have taken advantage of crises to raise prices beyond necessary levels. It calls for a reevaluation of the food system, advocating for government intervention to ensure fair pricing and protect consumers from corporate manipulation.

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Peta Pikiran

Video Tanya Jawab

  • What are the main reasons for rising grocery prices?

    Rising grocery prices are attributed to supply chain shocks, climate-related issues, and corporate profit manipulation.

  • How has the food supply chain evolved over time?

    The food supply chain has evolved from local trade to a complex global system involving multiple steps and players.

  • What role do corporations play in food pricing?

    Corporations often raise prices beyond necessary costs, leading to increased profits while consumers face higher prices.

  • What historical changes have affected food spending?

    Historically, food spending as a percentage of income has decreased significantly since the early 1900s.

  • How can government intervention help with food prices?

    Government intervention can help regulate prices and ensure affordable food for consumers, as seen in Mexico's basic basket program.

  • What is the impact of climate change on food prices?

    Climate change has led to droughts and other issues that disrupt food production, contributing to higher prices.

  • What is the significance of corporate consolidation in the food industry?

    Corporate consolidation reduces competition, allowing companies to manipulate prices and increase profits.

  • How did COVID-19 affect the food supply chain?

    COVID-19 caused significant disruptions in the food supply chain, leading to shortages and increased prices.

  • What is the relationship between consumer demand and price increases?

    Companies have found they can raise prices without significantly reducing consumer demand, leading to higher profits.

  • What are some examples of price manipulation in the food industry?

    Examples include egg producers raising prices during bird flu outbreaks while increasing profits.

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Gulir Otomatis:
  • 00:00:00
    (paper thuds)
  • 00:00:01
    - Eggs, milk, bread, ground beef, butter.
  • 00:00:04
    Prices at the grocery store are going up.
  • 00:00:06
    Especially for people who spend
  • 00:00:08
    a large amount of their income on food.
  • 00:00:10
    So a little price shock can have huge effects.
  • 00:00:12
    Grocery prices that usually go up 1% or 2% a year
  • 00:00:16
    have started jumping to more like 13% a year.
  • 00:00:18
    - Prices are going up yet again.
  • 00:00:20
    - [News Reporter] Sticker shock on store shelves.
  • 00:00:22
    - You probably don't need to be reminded.
  • 00:00:24
    - Now, of course, everyone's blaming COVID
  • 00:00:26
    and broader inflation,
  • 00:00:27
    and while those are a part of the explanation,
  • 00:00:30
    there's actually something bigger going on here.
  • 00:00:32
    I mean, check this out.
  • 00:00:33
    Food companies are bringing in record profits.
  • 00:00:35
    CEOs of those companies are making way more
  • 00:00:37
    just in the last few years,
  • 00:00:38
    and shareholders are getting huge payouts.
  • 00:00:40
    So what is going on here?
  • 00:00:43
    That is a question I have had for a long time,
  • 00:00:45
    and we're sitting here in the kitchen,
  • 00:00:46
    which is also our studio,
  • 00:00:48
    and I thought, you know, gotta use it sometime.
  • 00:00:51
    So why not on the video about food?
  • 00:00:53
    Today, we're gonna understand our food system,
  • 00:00:54
    the vast, complicated, kind of magical food system
  • 00:00:57
    that provides a lot of us with our nourishment,
  • 00:01:00
    bringing food from all around the world
  • 00:01:01
    to our grocery store shelves.
  • 00:01:03
    And then we're gonna look at the corporations
  • 00:01:04
    behind this system.
  • 00:01:06
    I wanna understand what their incentives are,
  • 00:01:07
    what their power is,
  • 00:01:09
    and what they have to do, if anything,
  • 00:01:10
    with the rising prices.
  • 00:01:12
    I also wanna understand
  • 00:01:13
    why they're making so much money right now.
  • 00:01:14
    And ultimately, I want to answer what and who is behind
  • 00:01:18
    this massive increase in grocery store prices.
  • 00:01:21
    (bell tolls)
  • 00:01:22
    About 8,000 years ago in what today is Syria and Iraq,
  • 00:01:27
    you could find humans doing something
  • 00:01:29
    that was pretty unique for the time: they're growing food,
  • 00:01:32
    and, in fact, more food than they actually needed,
  • 00:01:34
    and then started trading it
  • 00:01:36
    with other people who had more than they needed.
  • 00:01:38
    Now, this was new.
  • 00:01:39
    If there was one group who lived near a salt mine
  • 00:01:41
    and another group who grew wheat,
  • 00:01:43
    they would both make a surplus, they would swap their goods,
  • 00:01:45
    and both would be better off.
  • 00:01:46
    A super basic idea that changed everything.
  • 00:01:49
    Humans started doing this at a more and more massive scale,
  • 00:01:52
    crossing seas and deserts, building empires to move goods,
  • 00:01:56
    to share tools, to spread ideas.
  • 00:01:58
    And the collective human focus became:
  • 00:02:00
    how do we do this better, bigger?
  • 00:02:02
    We invented technology to improve it.
  • 00:02:04
    We fought wars over it.
  • 00:02:05
    We created money and companies and laws,
  • 00:02:08
    entire systems just to trade more stuff with more people.
  • 00:02:11
    Trade was changing the world,
  • 00:02:13
    and a lot of the history of our world
  • 00:02:14
    is the history of trade.
  • 00:02:16
    It's what spread ideas and technology
  • 00:02:19
    and flavors around the globe.
  • 00:02:20
    Arabic math and Chinese inventions,
  • 00:02:23
    tomatoes arriving to Italy,
  • 00:02:24
    chilies arriving to Asia, corn to Africa.
  • 00:02:27
    Coffee arrives to Europe in, like, the 1500s
  • 00:02:30
    and blows everyone's minds,
  • 00:02:32
    contributes to a whole revolution in thinking.
  • 00:02:36
    (supping) That's good coffee, guys.
  • 00:02:39
    But despite all of this global trade
  • 00:02:41
    and improvement in connecting the world
  • 00:02:43
    and bringing flavors everywhere,
  • 00:02:45
    food still remained quite expensive.
  • 00:02:47
    You still had to work really hard
  • 00:02:49
    just to feed yourself and your family.
  • 00:02:50
    Agriculture and food preparation
  • 00:02:52
    required immense physical labor, involving entire households
  • 00:02:55
    in the effort to produce sufficient calories to survive.
  • 00:02:58
    Like, we have data from the late 1700s
  • 00:03:01
    that shows that people in Britain spent
  • 00:03:03
    75% of their income just feeding themselves.
  • 00:03:06
    Around the same time in France,
  • 00:03:07
    they were spending about 70% of their income on bread alone.
  • 00:03:12
    (bread tearing)
  • 00:03:14
    Oh, my God. (munching)
  • 00:03:15
    Is there anything better than just white bread?
  • 00:03:17
    Okay, but soon that started changing, and fast.
  • 00:03:20
    (tray clatters) Let's graph it.
  • 00:03:21
    (paper rustling)
  • 00:03:22
    Look what happens by the year 1900:
  • 00:03:24
    a household is spending more like
  • 00:03:25
    42% of their income on food.
  • 00:03:27
    Then in the '30s, it goes down to 34%.
  • 00:03:29
    Just keeps falling.
  • 00:03:30
    After World War II,
  • 00:03:31
    something really dramatic changes in the global economy.
  • 00:03:35
    (lively jazz music)
  • 00:03:37
    The US and its allies built a global economic system
  • 00:03:40
    meant to connect the globe.
  • 00:03:41
    Maybe if everyone's economy was connected,
  • 00:03:43
    it would all be benefiting too much to fight each other,
  • 00:03:46
    was kind of the thinking.
  • 00:03:47
    And America wanted to set the rules for everyone,
  • 00:03:49
    and they successfully did.
  • 00:03:51
    And with this new system comes a whole new level
  • 00:03:54
    of efficiency and connection.
  • 00:03:55
    Like these magical boxes
  • 00:03:56
    that can go seamlessly from ships to trains to trucks,
  • 00:04:00
    drastically cutting costs and loading time.
  • 00:04:03
    The world standardized around everything,
  • 00:04:05
    from railroad sizes, pallet sizes, paper sizes, barcodes,
  • 00:04:08
    shoe sizes, screw sizes.
  • 00:04:10
    It's invisible stuff.
  • 00:04:11
    This isn't sexy, but it's important.
  • 00:04:13
    It's transformative.
  • 00:04:14
    The whole idea being that
  • 00:04:15
    if everyone's using the same system,
  • 00:04:16
    everything everywhere becomes more efficient.
  • 00:04:19
    Trade gets better.
  • 00:04:20
    Now, a tractor part made in South Korea
  • 00:04:22
    snaps in nicely to a tractor in Kansas.
  • 00:04:24
    And then there was the US dollar
  • 00:04:26
    that everyone could use as the global currency,
  • 00:04:28
    along with international agreements
  • 00:04:29
    that laid the rules for modern trade.
  • 00:04:32
    Suddenly, it's like the 1950s,
  • 00:04:33
    and the whole world is being stitched together
  • 00:04:35
    in ways our ancient grain-trading ancestors
  • 00:04:38
    could have never imagined.
  • 00:04:40
    And this is why today, almost everything you touch
  • 00:04:43
    has gone to more countries than you have,
  • 00:04:45
    because it traverses a huge network of the global economy.
  • 00:04:49
    We call it the supply chain.
  • 00:04:50
    (bright choral music)
  • 00:04:52
    Like, look at an iPhone, albeit kind of cracked.
  • 00:04:55
    This iPhone traveled to 43 countries
  • 00:04:58
    before it ended up in my hands.
  • 00:04:59
    Okay, but food isn't an iPhone.
  • 00:05:01
    Food is squishy and perishable
  • 00:05:03
    and needs to kind of be refrigerated.
  • 00:05:06
    It doesn't go through the same, like,
  • 00:05:07
    advanced global supply chain that other stuff does, right?
  • 00:05:10
    Wrong, actually.
  • 00:05:12
    (peppy upbeat music)
  • 00:05:13
    This is a beautiful tomato
  • 00:05:16
    that was grown here in my local area,
  • 00:05:18
    that I bought at a farmer's market.
  • 00:05:20
    Full disclosure: did not buy this.
  • 00:05:22
    My producer bought it, and I'm holding it now,
  • 00:05:24
    and I will probably eat it with this bread
  • 00:05:26
    and this coffee after I'm done shooting this video.
  • 00:05:28
    Anyway, this costs six bucks, okay?
  • 00:05:30
    This is a $6 tomato.
  • 00:05:31
    Take it in.
  • 00:05:33
    That beautiful tomato, wow.
  • 00:05:34
    Shoots really nicely.
  • 00:05:35
    Five miles from my house, okay?
  • 00:05:37
    Then we've got these tomatoes.
  • 00:05:39
    They don't look that much different, a little more uniform.
  • 00:05:41
    These are tomatoes that came from the global economy.
  • 00:05:44
    They're all basically the exact same size.
  • 00:05:46
    These have come to me from very far away,
  • 00:05:48
    not in this country.
  • 00:05:49
    We actually do grow a lot of tomatoes
  • 00:05:51
    here in the United States, over in California,
  • 00:05:52
    but most of our tomatoes are grown in Mexico.
  • 00:05:55
    Four billion pounds a year come into the US.
  • 00:05:57
    So here we are in northern Mexico,
  • 00:05:59
    here in these endless fertile fields.
  • 00:06:01
    I've actually spent a lot of time in this region,
  • 00:06:04
    not as a journalist but as a Mormon missionary,
  • 00:06:06
    riding in pickup trucks through fields
  • 00:06:08
    that grow food destined for US grocery stores.
  • 00:06:12
    (John speaking in foreign language)
  • 00:06:13
    Ah!
  • 00:06:15
    Anyway, let's not look at my bad Spanish.
  • 00:06:16
    Let's talk about the journey of a tomato.
  • 00:06:18
    They're often picked while they're still green;
  • 00:06:20
    they're not ripe yet.
  • 00:06:21
    Often picked by hand and then loaded into trucks.
  • 00:06:24
    A tomato like this will often go into a sealed room
  • 00:06:26
    where they are gassed with ethylene to ripen them.
  • 00:06:29
    Ethylene is just a naturally occurring hormone
  • 00:06:31
    that helps ripen these guys,
  • 00:06:33
    and they want them to all ripen at the same time,
  • 00:06:35
    right as they get to the grocery store.
  • 00:06:36
    But we have a long way to go
  • 00:06:37
    before we get to the grocery store.
  • 00:06:38
    So they're pumped with this gas.
  • 00:06:39
    And then, if they're going into cans,
  • 00:06:41
    which a lot of tomatoes do,
  • 00:06:42
    they go through this industrial factory wizardry.
  • 00:06:45
    But for the ones that are gonna end up like this, fresh,
  • 00:06:48
    they are on a truck headed north.
  • 00:06:51
    They end up in a nearby city,
  • 00:06:52
    probably the capital, Culiacan,
  • 00:06:54
    in this big facility where they're sorted, chilled,
  • 00:06:57
    and then put on big pallets.
  • 00:06:58
    They get back onto a truck,
  • 00:07:00
    which, by the way, all of these trucks are refrigerated.
  • 00:07:02
    That's a big logistical challenge,
  • 00:07:04
    to make sure these things don't get too hot or cold.
  • 00:07:06
    And now the truck is heading north.
  • 00:07:07
    It gets to the US-Mexico border.
  • 00:07:09
    Look, this is where people go back and forth
  • 00:07:11
    between the two countries,
  • 00:07:12
    but over here is a special border crossing just for trucks.
  • 00:07:15
    Our tomatoes are in one of these.
  • 00:07:16
    It clears customs, and then it probably ends up
  • 00:07:18
    at one of these transfer stations,
  • 00:07:20
    where the trailer might be transferred onto another truck
  • 00:07:22
    to an American driver who will take it from there.
  • 00:07:25
    The tomatoes are now in the United States.
  • 00:07:26
    Once in the US, they might be re-ripened and repackaged,
  • 00:07:30
    and they eventually take a long-haul trip
  • 00:07:31
    on America's freeways, ending up at a distribution center
  • 00:07:35
    like this one in Illinois.
  • 00:07:37
    Here, tucked into the endless expanse of farmland,
  • 00:07:39
    is this massive building surrounded by cargo trucks.
  • 00:07:42
    The tomatoes are unloaded, they're scanned for inventory,
  • 00:07:45
    they're repackaged, and then they're back on the road,
  • 00:07:47
    headed towards the grocery store.
  • 00:07:49
    And I promise I'm getting close here.
  • 00:07:50
    Okay, we've arrived at the grocery store.
  • 00:07:52
    This whole journey was nine days,
  • 00:07:53
    about 1,000 kilometers, or 620 miles,
  • 00:07:56
    and the tomatoes are finally stacked in the vegetable aisle,
  • 00:07:59
    ready for you to buy a pound for $2,
  • 00:08:01
    bring them home, chop 'em up, and throw them into a sauce.
  • 00:08:04
    Bon appetit.
  • 00:08:06
    That was crazy, right?
  • 00:08:07
    Like, that whole journey, like, your tomatoes
  • 00:08:09
    came all the way from a farm in Mexico,
  • 00:08:11
    and they somehow made it to the grocery store
  • 00:08:13
    without being smashed or, like, going bad,
  • 00:08:15
    and are somehow significantly cheaper than this?
  • 00:08:19
    How does that work?
  • 00:08:20
    Like, how does that make any sense?
  • 00:08:21
    And it's not just tomatoes.
  • 00:08:23
    (light groovy music)
  • 00:08:26
    Avocados are picked by hand in southern Mexico,
  • 00:08:29
    sorted, chilled, trucked,
  • 00:08:30
    and displayed in the Northeast of the United States
  • 00:08:33
    in the dead of winter for, like, three bucks.
  • 00:08:36
    Most of our vegetables in the United States
  • 00:08:38
    come from other countries, like 60%.
  • 00:08:40
    And of course, you can imagine that it gets more complicated
  • 00:08:43
    with animal products: eggs, milk, meat.
  • 00:08:46
    But this is your food system.
  • 00:08:47
    Our food system.
  • 00:08:48
    The majority of us participate in this food system.
  • 00:08:51
    Wait, pause.
  • 00:08:52
    I'm about to get into the part
  • 00:08:54
    where I say why the food is more expensive,
  • 00:08:55
    and these journeys are really important.
  • 00:08:57
    But I wouldn't be able to make these videos
  • 00:09:00
    without sponsors.
  • 00:09:01
    And so I need to take a moment to thank today's sponsor,
  • 00:09:03
    who is Incogni.
  • 00:09:04
    I'm a big fan of Incogni because it has changed my world
  • 00:09:08
    as it pertains to junk mail and robocalls
  • 00:09:10
    and annoying texts, and privacy.
  • 00:09:12
    Turns out that in the same way
  • 00:09:14
    that there's a big invisible market for tomato shipping,
  • 00:09:17
    there's also an invisible market for your data, your name,
  • 00:09:21
    your birthday, what you do online,
  • 00:09:23
    what you buy, where you live.
  • 00:09:26
    This is valuable stuff,
  • 00:09:27
    and it is quietly traded in the background
  • 00:09:30
    without you really knowing about it.
  • 00:09:31
    You've agreed to it by clicking these boxes.
  • 00:09:34
    And now, legally, these data brokers have your information,
  • 00:09:38
    and they can sell it as a commodity.
  • 00:09:40
    Insurance companies, people search sites, marketers.
  • 00:09:43
    But in the same way that they legally can do this,
  • 00:09:45
    you legally can ask them to not do it.
  • 00:09:47
    But it's hard and cumbersome and annoying,
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    which is where Incogni comes in.
  • 00:09:50
    Here's how it worked for me.
  • 00:09:51
    I signed up for Incogni.
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    I gave them permission to go request
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    that I be taken off these lists.
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    Incogni does this in the background.
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    Month after month, I get added to a list.
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    Incogni goes and asks that company to take me off the list.
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    And what I get to do
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    is just watch it all happen in the background.
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    This is a dashboard that is the status
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    of all of these requests that Incogni has done for me.
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    How many they've sent out, how many are still in progress,
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    and how many they've completed.
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    How many lists I've been taken off of.
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    685.
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    They even give me this fancy graph.
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    This is my privacy being reclaimed.
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    where you can just go on,
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    and if there's a website that you think your data is on,
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    like if you find yourself
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    on a people search site or whatever,
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    you can send that to Incogni,
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    and they will go out on your behalf
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    to request that you be taken off.
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    I mean, it's just great.
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    So if you want to get 60% off an Incogni plan,
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    you can use my link, which is Incogni.com/JohnnyHarris.
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    You get 60% off if you do the annual plan.
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    I've been doing the annual plan for two years now,
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    which is why I have 685 completed requests,
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    because Incogni kind of monitors constantly.
  • 00:11:00
    As you get added to lists,
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    they continue to request that you be taken off lists.
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    So, way to reclaim your privacy if you're into that stuff.
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    If you don't like your data being bought and sold
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    without your explicit knowledge or permission,
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    Incogni might be a good fit for you.
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    I'm also just grateful that Incogni comes back
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    to sponsor our videos and support our journalism.
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    We wouldn't be able to make these videos without them.
  • 00:11:18
    Okay, let's dive back into this supply chain,
  • 00:11:20
    the tomato journey,
  • 00:11:21
    and the answer to this very important question.
  • 00:11:24
    (groovy smooth jazz music)
  • 00:11:28
    So why is food suddenly way more expensive?
  • 00:11:31
    Well, there are two answers to that question
  • 00:11:33
    that we are about to get to.
  • 00:11:34
    The first one will make a lot of intuitive sense
  • 00:11:36
    because we just traced the journey of a tomato.
  • 00:11:39
    The second one will boil your blood.
  • 00:11:41
    Answer number one: something happens along the way.
  • 00:11:45
    Like, let's go back to this map.
  • 00:11:46
    And you see that in this journey,
  • 00:11:48
    your tomatoes passed through farmers and packagers
  • 00:11:51
    and cold storage and drivers and customs brokers,
  • 00:11:54
    international trade treaties, warehouses,
  • 00:11:56
    wholesalers, grocery stores.
  • 00:11:58
    If any part of this system breaks or becomes more expensive,
  • 00:12:04
    or if there's a power outage or a storm or a frost
  • 00:12:07
    or a drought or gas prices spike, workers go on strike,
  • 00:12:11
    there's a new tariff,
  • 00:12:11
    that can make any one of these steps more expensive.
  • 00:12:14
    And it is you, the final customer, who will pay that price.
  • 00:12:17
    We call this a supply chain shock or shortage.
  • 00:12:20
    And it's kind of ironic that the system
  • 00:12:22
    that makes food more accessible and cheaper
  • 00:12:25
    is also the same system that makes our prices fragile.
  • 00:12:28
    So yeah, that's answer number one: supply chain shocks.
  • 00:12:31
    And over the last four years,
  • 00:12:32
    I mean, you know, there's kind of been a lot.
  • 00:12:34
    (lively percussive music)
  • 00:12:36
    There's obviously COVID,
  • 00:12:37
    but that was just the beginning of a domino effect.
  • 00:12:40
    There was a drought in the Mediterranean,
  • 00:12:41
    so olive oil prices went up.
  • 00:12:42
    - Climate-related issues
  • 00:12:43
    have screwed up fresh produce.
  • 00:12:45
    Writ large, there are both climate stuff
  • 00:12:47
    that affects how much we can grow,
  • 00:12:49
    but also sometimes climate
  • 00:12:51
    then interacts with, like, disease outbreaks.
  • 00:12:53
    - A freeze in Texas wiped out a bunch of citrus.
  • 00:12:55
    - [News Reporter] These farmers are experiencing
  • 00:12:57
    some of the worst conditions ever.
  • 00:12:59
    Because of the drought,
  • 00:13:00
    the ground is just not fit for grazing.
  • 00:13:01
    And like many others,
  • 00:13:02
    the rancher here has had to cull his herd
  • 00:13:04
    because it's more economical than feeding them.
  • 00:13:06
    - Russia's invasion of Ukraine
  • 00:13:07
    messed with a lot of industries.
  • 00:13:09
    - The war in Ukraine spiked wheat prices there
  • 00:13:11
    for a little bit and also spiked fertilizer prices.
  • 00:13:14
    And the issue is, Russia controls
  • 00:13:16
    one type of fertilizer but not two others.
  • 00:13:18
    And so it meant farmers had to, like, retool
  • 00:13:21
    all of their systems to switch to the other fertilizer.
  • 00:13:23
    And then there was a run on those two fertilizers.
  • 00:13:26
    Oh, palm oil got really screwed up there for a while
  • 00:13:29
    because Indonesia decided to temporarily ban exports
  • 00:13:32
    because prices were increasing so much,
  • 00:13:34
    so they wanted to make sure they had enough supply.
  • 00:13:35
    This was also kind of in the wake of Ukraine.
  • 00:13:37
    And so vegetable oil prices were up.
  • 00:13:40
    - A hurricane in Florida messes with orange groves.
  • 00:13:42
    The Houthi rebels in Yemen are firing rockets
  • 00:13:45
    at these merchant ships
  • 00:13:46
    that are the lifeblood of the global economy.
  • 00:13:48
    - Canada, the largest producer of canola oil,
  • 00:13:51
    had a big drought, and so that dropped.
  • 00:13:52
    Meat processing during the pandemic,
  • 00:13:54
    there were massive COVID outbreaks in meatpacking,
  • 00:13:57
    and so they had slowed down a lot of line speeds
  • 00:14:00
    because there were fewer workers.
  • 00:14:02
    And so just, like, less meat was getting slaughtered
  • 00:14:04
    and packaged.
  • 00:14:05
    - And then, of course, there were shortages
  • 00:14:07
    in random things like packaging and trucking
  • 00:14:09
    and cold storage and shipping containers.
  • 00:14:12
    - During COVID, production of aluminum cans was lower
  • 00:14:14
    because factories were closed.
  • 00:14:16
    But then trade wars over aluminum have affected cans,
  • 00:14:19
    and so for a while, soda was being affected,
  • 00:14:21
    and beer was being affected.
  • 00:14:22
    Each shock to the system triggers a reverberation
  • 00:14:26
    through the rest of the system,
  • 00:14:28
    which makes things more expensive and unpredictable.
  • 00:14:31
    The price goes up,
  • 00:14:31
    and eventually, the price of your final product,
  • 00:14:34
    the thing you see on the grocery aisle, has gone up.
  • 00:14:37
    Okay, so no one's disputing that supply chain shocks
  • 00:14:40
    are a major reason why prices have gone up,
  • 00:14:43
    but this isn't actually the full explanation.
  • 00:14:45
    There's something bigger going on here.
  • 00:14:47
    And that gets to my second answer to the question
  • 00:14:49
    of why grocery prices are more expensive.
  • 00:14:51
    I'll just say it upfront here,
  • 00:14:53
    which is, we've all been kind of tricked.
  • 00:14:55
    And there are people making a lot of money
  • 00:14:57
    off of us being tricked about prices.
  • 00:15:00
    - Basically, in COVID,
  • 00:15:01
    I think there was kind of a reckoning.
  • 00:15:03
    Customers were pretty understanding when companies said,
  • 00:15:07
    "Hey, you're going through hard times, and so are we.
  • 00:15:09
    Like, our costs are going up."
  • 00:15:10
    There was kind of this reset.
  • 00:15:11
    The American consumer has gotten so used to
  • 00:15:14
    having a really cheap thing delivered to their door
  • 00:15:17
    in, like, two hours, right?
  • 00:15:19
    Like in econ 101, they teach you about a supply
  • 00:15:21
    and a demand curve, right?
  • 00:15:22
    And as you increase prices,
  • 00:15:24
    the number of units you sell goes down.
  • 00:15:26
    And what you're trying to do
  • 00:15:27
    is, like, maximize those two things
  • 00:15:29
    of, like, I can sell as many products as I can make
  • 00:15:32
    for as much as this.
  • 00:15:33
    And, like, that's, you know, the price.
  • 00:15:34
    - The invisible hand. Yeah.
  • 00:15:35
    - Right? (laughs) Yes.
  • 00:15:36
    And so if you increase prices,
  • 00:15:39
    you expect, intuitively, to sell a little bit less.
  • 00:15:42
    Now, you can, like, jigger it enough
  • 00:15:44
    that, like, the total is a little bit higher.
  • 00:15:46
    But what companies realized is they could inch prices up
  • 00:15:49
    and see no, or very little, reduction in consumer demand.
  • 00:15:53
    And so they kept doing it.
  • 00:15:54
    - This will be clear very soon
  • 00:15:55
    because there's a lot of examples of this,
  • 00:15:57
    but the best one that is on my mind is eggs.
  • 00:16:00
    - The egg prices, out of control.
  • 00:16:03
    - Eggs are insanely expensive right now.
  • 00:16:05
    Maybe by the time you're watching this,
  • 00:16:06
    they will have gone down a little bit.
  • 00:16:08
    But over the last, like, three or four years,
  • 00:16:09
    egg prices have gone crazy.
  • 00:16:11
    And what's the explanation that we're all hearing?
  • 00:16:13
    Yes, the bird flu, culling millions of hens.
  • 00:16:17
    - Bird flu. - Bird flu.
  • 00:16:18
    - Bird flu. - Already,
  • 00:16:19
    more than 90 million birds have been killed
  • 00:16:21
    since the outbreak started.
  • 00:16:23
    - I mean, if you are an egg producer
  • 00:16:25
    and suddenly there is an outbreak of bird flu
  • 00:16:28
    in all of your farms, like, that's a huge deal.
  • 00:16:31
    That would be, like, really terrible, right?
  • 00:16:33
    For your business.
  • 00:16:34
    You're like, "Man, our product is being killed by a flu."
  • 00:16:37
    And, wait a minute.
  • 00:16:38
    "US's biggest egg producer's
  • 00:16:41
    profits triple as prices soar."
  • 00:16:45
    Wait, triple profits for the biggest egg producer?
  • 00:16:49
    Oh, and if you look at the biggest egg producer's
  • 00:16:53
    stock price, you see this:
  • 00:16:55
    right around the time when the avian flu is happening,
  • 00:16:57
    their stock price is going nuts.
  • 00:16:59
    Time to get out their annual report.
  • 00:17:00
    (paper rustling)
  • 00:17:02
    Annual report for Cal-Maine Foods Inc.
  • 00:17:05
    They're a publicly traded company.
  • 00:17:07
    They must disclose all of their financials,
  • 00:17:09
    which means we can give a little more insight
  • 00:17:10
    as to how they fared during this time,
  • 00:17:13
    when there is a crisis in our egg economy.
  • 00:17:18
    And all of us are paying, like,
  • 00:17:19
    more than double the price for a dozen eggs.
  • 00:17:22
    This is 2023,
  • 00:17:24
    and it looks like its shareholders
  • 00:17:26
    got paid $250 million in profits.
  • 00:17:30
    Okay?
  • 00:17:31
    It's right in the middle of the bird flu crisis.
  • 00:17:33
    You wouldn't think that they would be profiting that much.
  • 00:17:35
    But is that a lot?
  • 00:17:36
    $250 million?
  • 00:17:37
    Maybe that's not that much.
  • 00:17:38
    Let's graph the dividends,
  • 00:17:40
    the profits paid out to shareholders.
  • 00:17:42
    (paper rustling) (sparse percussive music)
  • 00:17:44
    Whoa! Okay.
  • 00:17:45
    Well, 2023 was a great year
  • 00:17:49
    for the largest egg producer in the United States,
  • 00:17:51
    despite, like, all of this avian flu.
  • 00:17:55
    So in 2023, they paid $250 million.
  • 00:17:57
    The year before, they paid $6 million.
  • 00:18:00
    So they had a 40-times increase in the profits they paid out
  • 00:18:03
    to their shareholders, right in the heart of when all of us
  • 00:18:06
    were going to restaurants and seeing these signs:
  • 00:18:08
    "We're raising prices on eggs because there's a bird flu,
  • 00:18:10
    so we have to pay more."
  • 00:18:11
    But the company making the eggs
  • 00:18:12
    is profiting a lot more money?
  • 00:18:14
    But it's not just revenue.
  • 00:18:15
    It's not like they're making more money
  • 00:18:17
    and their costs have increased a bunch, so they're not...
  • 00:18:19
    They're profiting.
  • 00:18:20
    They're making way more money after all of their costs,
  • 00:18:23
    and we are all paying more.
  • 00:18:25
    Oh, and this year, 2025,
  • 00:18:26
    their profits are up 342% in Q2 of this year.
  • 00:18:31
    I mean, just to mic drop, like, drive this home.
  • 00:18:34
    Let's put these two graphs next to each other.
  • 00:18:36
    This one is the price for a dozen eggs.
  • 00:18:39
    It's gone up a ton because of bird flu.
  • 00:18:40
    And this one is profits for shareholder of Cal-Maine Foods
  • 00:18:43
    going up at the same time.
  • 00:18:45
    So these graphs tell a story of a company
  • 00:18:47
    who was able to raise prices
  • 00:18:48
    more than what they needed to cover their costs,
  • 00:18:50
    and they were somehow able to do that.
  • 00:18:51
    Can we just look at the supply of eggs in the United States?
  • 00:18:56
    Just real quick.
  • 00:18:58
    This graph, there's the price.
  • 00:18:59
    Price goes up here, right?
  • 00:19:00
    Now let's draw on the number of eggs produced
  • 00:19:03
    in the United States during this time.
  • 00:19:05
    Here's the outbreak of the avian flu, early 2023.
  • 00:19:08
    Now I'm going to draw on the number of eggs
  • 00:19:11
    produced in the United States.
  • 00:19:13
    If I were guessing, I hadn't seen this chart before;
  • 00:19:15
    I would imagine it would look something like this:
  • 00:19:16
    like, eggs, eggs, eggs.
  • 00:19:17
    Flu happens, production of eggs plummets.
  • 00:19:20
    When there's less supply, prices have to go up.
  • 00:19:23
    And that's why prices went up.
  • 00:19:24
    Now let's draw on the real shape.
  • 00:19:25
    Again: number of eggs produced in the United States.
  • 00:19:27
    Boom, kind of barely dips.
  • 00:19:29
    Yes, avian flu was a real thing.
  • 00:19:31
    I'm not, like, drawing some, like, conspiracy theory here
  • 00:19:32
    that, like, this is not real.
  • 00:19:34
    But, like, this crisis was as much about storytelling
  • 00:19:37
    as it was about supply and demand.
  • 00:19:39
    We all accepted way higher prices because of these signs,
  • 00:19:44
    because of all of this news.
  • 00:19:45
    And in fact, thanks to COVID,
  • 00:19:47
    we were kind of used to hearing about supply chains
  • 00:19:49
    and paying higher prices and waiting longer
  • 00:19:51
    because of something that's out of our control.
  • 00:19:54
    This is the driver of inflation, right?
  • 00:19:56
    But what this story tells is that there's a company
  • 00:19:59
    that, by the way, controls 25% of the market.
  • 00:20:02
    They're a huge player,
  • 00:20:03
    the largest player by far in the egg economy,
  • 00:20:05
    that has the ability to raise prices
  • 00:20:08
    even when they don't need to increase costs.
  • 00:20:10
    And that company, by the way,
  • 00:20:12
    if you chart how many eggs they were making,
  • 00:20:14
    during the crisis, they were actually making more eggs
  • 00:20:17
    and just selling them at a way higher price.
  • 00:20:19
    So, of course, their profits tripled.
  • 00:20:21
    Of course, their shareholders made off with huge dividends.
  • 00:20:24
    You can read a lot more about this
  • 00:20:26
    in a couple really good reports
  • 00:20:27
    that were very helpful for our reporting,
  • 00:20:29
    one of which concludes
  • 00:20:31
    that corporations have used this outbreak, the avian flu,
  • 00:20:34
    as a smoke screen for raising prices
  • 00:20:37
    beyond what was necessary to cover any rising costs.
  • 00:20:40
    This is the kind of stuff that happens
  • 00:20:42
    when one company owns a huge portion of an industry.
  • 00:20:46
    They just have a ton of control,
  • 00:20:48
    and they're able to manipulate the market.
  • 00:20:50
    That is supposed to be a competitive space
  • 00:20:52
    where all the firms compete for customers
  • 00:20:54
    by lowering their prices as much as they possibly can.
  • 00:20:56
    But our modern food system
  • 00:20:58
    has become more and more consolidated.
  • 00:21:00
    Four firms handle 85% of all beef processing in the US.
  • 00:21:04
    Three companies control 78% of all pasta.
  • 00:21:07
    Two firms own 70% of the canned tuna industry.
  • 00:21:10
    One company dominates seed genetics.
  • 00:21:13
    70% of all grocery stores flow through just four chains.
  • 00:21:17
    This level of consolidation
  • 00:21:19
    means that companies don't compete on prices;
  • 00:21:22
    they match prices.
  • 00:21:23
    And when there is a crisis,
  • 00:21:25
    they're able to take advantage of that
  • 00:21:27
    to help spread the narrative and signal to the rest of us
  • 00:21:30
    that prices have gone up because of this crisis.
  • 00:21:31
    And really, they're just padding their bottom line.
  • 00:21:33
    There's a bunch of lawsuits happening right now
  • 00:21:35
    because of this.
  • 00:21:35
    McDonald's is suing meat companies
  • 00:21:37
    for colluding to keep prices high.
  • 00:21:39
    Frozen potatoes for your French fries,
  • 00:21:42
    also very consolidated.
  • 00:21:43
    Also some, like, price manipulation allegations there.
  • 00:21:46
    A big turkey producer
  • 00:21:47
    is in the middle of a price-fixing scandal.
  • 00:21:49
    They've had to pay out settlements:
  • 00:21:51
    $32 million here, $4 million there.
  • 00:21:54
    I mean, this is kind of a cost of doing business
  • 00:21:56
    when you are a big industrial food producer
  • 00:21:58
    and you use your power to cash in.
  • 00:22:00
    So we've been told a story that these crises,
  • 00:22:03
    COVID and supply chain shocks,
  • 00:22:05
    are at the root of inflation, of prices going up.
  • 00:22:08
    But there's now pretty compelling evidence
  • 00:22:10
    that corporate profits,
  • 00:22:12
    their ability to take advantage of these crises
  • 00:22:13
    to raise prices above where they need to be,
  • 00:22:15
    is a major driver of inflation.
  • 00:22:17
    Meaning we're paying more money,
  • 00:22:18
    and we're making these companies way richer.
  • 00:22:21
    Corporate profits are at an all-time high,
  • 00:22:24
    despite some volatility in the economy.
  • 00:22:26
    Last year, margins reached over 16%,
  • 00:22:28
    which is the highest on record since 1950.
  • 00:22:31
    And it's not just in food; it's across all sectors.
  • 00:22:34
    - The CFO of Hershey in 2023
  • 00:22:37
    said on an earnings call to the company's shareholders,
  • 00:22:39
    quote, "Pricing and productivity gains
  • 00:22:42
    more than offset inflation
  • 00:22:44
    and higher manufacturing and overhead costs."
  • 00:22:46
    In non-Wall Street speak, that says,
  • 00:22:49
    "We increased our prices
  • 00:22:51
    well above what our increased costs were."
  • 00:22:54
    Like, our costs for sugar or cocoa, etc., have gone up,
  • 00:22:57
    but we have been able to not only pass
  • 00:22:59
    all of those costs onto consumers,
  • 00:23:01
    but then some, increasing our profit margin.
  • 00:23:04
    Hershey wasn't the only company to say this.
  • 00:23:06
    Virtually, like, the vast majority
  • 00:23:08
    of S&P 500 companies said this.
  • 00:23:10
    Frito-Lay and PepsiCo, for example, did the same thing,
  • 00:23:13
    where they said, "We've been able to rapidly increase
  • 00:23:16
    kind of our pricing actions", is what they call them,
  • 00:23:19
    which just means increasing prices.
  • 00:23:20
    - So profits are soaring while a family of four
  • 00:23:23
    who's surviving on a thrifty food plan
  • 00:23:26
    is seeing their costs for food increase by 30% or more
  • 00:23:30
    over the last few years.
  • 00:23:32
    More and more turning to government programs.
  • 00:23:34
    And so now our taxpayer dollars
  • 00:23:36
    are going to help inflated prices
  • 00:23:39
    to make shareholders rich.
  • 00:23:41
    It's not a good setup.
  • 00:23:42
    It's not a good set of incentives.
  • 00:23:44
    It's not a free market.
  • 00:23:45
    This isn't good.
  • 00:23:46
    And yet, luckily, there is some hope here.
  • 00:23:48
    The Department of Justice is already investigating
  • 00:23:50
    this egg price-fixing allegation.
  • 00:23:53
    Cal-Maine has already been accused of doing this
  • 00:23:56
    in previous disease outbreaks.
  • 00:23:58
    - [News Reporter] Now the largest supplier of eggs in the US
  • 00:24:01
    now under federal investigation related to sky-high prices
  • 00:24:05
    that consumers saw for several months.
  • 00:24:06
    - But what really needs to happen is a breaking up
  • 00:24:09
    of these food companies
  • 00:24:10
    that have so much power in the market.
  • 00:24:12
    Food isn't like other things.
  • 00:24:14
    It's not like vacations and cars
  • 00:24:17
    and things that are discretionary; it is our basic survival.
  • 00:24:19
    We have antitrust laws.
  • 00:24:21
    We have other laws that protect small businesses.
  • 00:24:24
    And this current crisis is rejuvenating a discourse
  • 00:24:27
    around seeing what the government can do
  • 00:24:29
    to actually make prices more affordable
  • 00:24:31
    to everyday Americans.
  • 00:24:33
    There's also a necessary reckoning
  • 00:24:34
    with how reliant we are on these far-flung supply chains.
  • 00:24:39
    COVID really started this,
  • 00:24:40
    and you're starting to see more and more stuff
  • 00:24:42
    come regional and local.
  • 00:24:44
    Mexico is experimenting with the government coming in
  • 00:24:47
    and putting a price control for a basic basket of food,
  • 00:24:50
    using their power to negotiate with food corporations
  • 00:24:53
    to keep prices affordable for the basics.
  • 00:24:56
    - One place that grocery prices
  • 00:24:57
    really didn't increase all that much was Mexico,
  • 00:24:59
    and that's because Claudia Sheinbaum's administration
  • 00:25:02
    did this thing called, in Spanish,
  • 00:25:03
    it translates to "basic basket."
  • 00:25:05
    And so for the equivalent of, like, $40,
  • 00:25:08
    you can get enough food to feed your family,
  • 00:25:10
    of like rice, beef, a couple of vegetables,
  • 00:25:12
    a gallon of milk, these basics.
  • 00:25:14
    And in fact, that price has come down
  • 00:25:16
    by, like, 12% over the past year.
  • 00:25:18
    And she did this.
  • 00:25:18
    It's effectively a price control, but it's voluntary.
  • 00:25:21
    So, in fact, Walmart of Mexico participates in this program.
  • 00:25:24
    But she got a bunch of farmers and suppliers,
  • 00:25:27
    and retailers to all buy into this program.
  • 00:25:30
    She negotiated this big deal.
  • 00:25:31
    And they all offer, like, a basic basket of goods
  • 00:25:34
    for a low price for Mexican families.
  • 00:25:37
    She just used, kind of, the weight of the government to say,
  • 00:25:39
    "Hey, I think food should be cheaper for Mexicans,
  • 00:25:42
    and how can we work together to do it?"
  • 00:25:44
    (Claudia speaking in foreign language)
  • 00:25:52
    - So there is some movement happening here.
  • 00:25:54
    The reality is, our food system is amazing;
  • 00:25:57
    it has made food much cheaper than it was,
  • 00:26:00
    but it has some real weaknesses.
  • 00:26:02
    Weaknesses that are being exposed in the last few years
  • 00:26:05
    and that a lot of people are feeling
  • 00:26:07
    when they go to the grocery store.
  • 00:26:08
    Those are market failures.
  • 00:26:10
    And that is where the government steps in,
  • 00:26:12
    to ensure that our food system works for the consumers,
  • 00:26:14
    the people who need to be able to rely on affordable food,
  • 00:26:17
    and not for the corporations that provide it.
  • 00:26:19
    (groovy downbeat electronic music)
Tags
  • grocery prices
  • food supply chain
  • corporate profits
  • inflation
  • food industry
  • consumer demand
  • government intervention
  • climate change
  • price manipulation
  • historical context