AUDIO: Ken Foster, Purdue University
An ag economist says the ongoing conflict in the Middle East could have lasting ripple effects throughout the entire food supply chain.
Ken Foster with Purdue University says labor, transportation, and energy disruptions are driving broader price increases.
“It’s affecting almost the whole food dollar,” he says. “It’s having impacts at the farm level through higher fuel prices, but it’s also affecting that other 80 percent through all of these other factors.”
He tells Brownfield food retailers are absorbing price shocks through contractual arrangements and forward pricing, but, “If we get a few months out, it’s going to be really hard for consumers to substitute away from one food good or group of food products to something else. We’re going to start to see that trickling into higher food prices.”
Foster says prolonged closure of the Strait of Hormuz could add 3 to 6 percentage points to food-at-home inflation over the next year.
