2025 Grocery Prices Rise: Impending Farm Crisis

Episode 84 October 24, 2024 00:31:12
2025 Grocery Prices Rise: Impending Farm Crisis
Dust'er Mud
2025 Grocery Prices Rise: Impending Farm Crisis

Oct 24 2024 | 00:31:12

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Hosted By

Rich McGlamory Shelley McGlamory

Show Notes

️ In this episode, we dive deep into the latest news surrounding the American Rural Economy and Agriculture Policy as we face the next potential Farm Crisis. With 2025 predictions of rising consumer prices, increasing inflation, and looming food shortages, farmers and consumers alike are feeling the pressure. We'll explore how the crisis is driven by price increases, changing crop prices, and the impact on the food supply chain.

Join us as we discuss the economic crisis that threatens sustainable farming and local communities, and offer insights on how agriculture policy needs to adapt to support both farmers and consumers. Whether you're interested in farming issues, food prices, or the future of sustainable farming, this episode offers a comprehensive look at the state of agriculture in 2025 and beyond.

Keywords: Rural Economy, Agriculture Policy, Consumer Prices, Inflation, 2025 Predictions, Farm Crisis, Price Increase, Food Supply Chain, Food Shortages, Sustainable Farming, Economic Crisis, Farming Issues, Crop Prices.


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0:00 - Intro
0:57 - Grocery Prices
1:37 - Prices are going to INCREASE
2:12 - 5 Steps to Farm Crisis: Step 1
4:56 - Step 2
6:05 - Step 3
7:43 - Step 4
11:22 - Step 5
12:49 - So What?
21:07 - Bonus Step-Climate Pressure
22:10 - What Can We Do?

#rural #latestnews #ruraleconomy #agriculture policy #consumerpriceindex #inflation #2025predictions #farming #farmbill #homestead #farmer #smallfarm

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Episode Transcript

[00:00:00] Speaker A: Sounds sensational. Stick around. Listen to what we've got to say. We'll talk you through the five steps that lead to a farm crisis. We'll take you through how those steps happened in the 1930s, the 1980s, and then we'll look at what's happening today, and then we'll end the discussion with, what does it mean for you as a consumer with 2024 seeing record high grocery prices? Do you expect any relief in 2025? The answer is no. Grocery prices are going to continue to rise in 2025, and we're going to talk about why. [00:00:33] Speaker B: This is the Duster Mud podcast. We are your hosts. [00:00:37] Speaker A: My name is Shelley, and I'm rich. [00:00:38] Speaker B: After 25 years of rich being in the Air Force, we left Washington, DC, moved to southwest Missouri, and started farming regeneratively right here at air to ground farms. And that brings us to the subject of farming a lot. But more importantly, dude, we do groceries. [00:00:57] Speaker A: Grocery prices, as you well know, have just been increasing and increasing and increasing. [00:01:03] Speaker B: And has anybody seen a box of cereal? The price on a box of Cheerios, it is incredible. We don't buy much cereal, but I was blown away when we were in south Florida, and I was in a publix, and the price of a box of cereal was $9. [00:01:21] Speaker A: Yeah, you would hope, or we all hope. Okay, well, probably we've seen the peak, and good grief, prices have got to come down, right? The answer, though, we believe, is no, prices are not going to come down. They're actually going to increase. And we want to talk to you about why. Why is that going to happen? [00:01:44] Speaker B: It looks like we might be headed towards a farm crisis that much like we've seen in the past. And Winston Churchill once said that those who do not learn from the past are doomed to repeat it. And we may be headed in a. Like a freight train towards that. Okay, the five steps to a farm crisis. What are they? [00:02:11] Speaker A: Well, the first one is new technology. That sounds maybe a little silly when we're saying back in the 1920s, but at that time, they had new technology that had just come onto the scene, and that was power tractors. Right. [00:02:28] Speaker B: They had engines. Before that, they were using mules and ox and horse, and they were having to plow things by hand, really? [00:02:35] Speaker A: That's right. So the new technology that happened in the twenties was power farming. [00:02:39] Speaker B: Well, what with power farming, they got increased production. They were able to make more. They were able to farm more land with that. So that did lead to huge boost in yields. Yeah, huge. And it led to a significant overproduction. So that caused the dust bowl legitimately. They over farmed the land in order to, because they could, and the prices were low. And so there were many reasons that they continued to produce and produce. And we'll get into some more of those in just a minute. But the point is, the advent of new technology affects farming. [00:03:28] Speaker A: In the 1980s, 1980s, we had the introduction of chemicals. So we're, you know, huge introductions of chemical fertilizers, herbicides, pesticides. What are we going to spray? We gotta kill this thing. We gotta grow this thing. Chemical, chemical, chemical. And in the eighties, the same thing that really led to another increase in production. [00:03:53] Speaker B: And then now today. [00:03:56] Speaker A: It'S. I was reading articles this week, and it's all about using artificial intelligence in farming. And the amount of data that you have coming in now on the. And if you think about, like, large scale farms where there's multiple tractors and combines and different things running around, a lot of those things are autonomous. They're being either gps driven or driven from a control booth someplace else. And the amount of data that's coming in from those tractors is enormous. And adjustments are being able to be made on, like, you know, field to field levels where it's not just, well, we're in Iowa, thus we need to do this thing. So there's a lot of improvements that are being able to be made right now in farming due to the digital age. [00:04:47] Speaker B: Well, they're maximizing yields on that, being able to use all that data and those machines that are run by computers. [00:04:56] Speaker A: That's true. [00:04:56] Speaker B: So step two to a farm crisis is rising crop prices. So rising crop prices, meaning they can. [00:05:09] Speaker A: Make more money, not necessarily the prices of the crops goes up. So world war. At the end of World War one, we had a demand. We were now going to feed the world. You know, like, we now have tractors on the scene, we now have the ability to produce a lot more yields. And so the demand goes up. Okay, same thing. In the 1980s, the crop prices spiked again. Right now, corn prices have doubled. [00:05:43] Speaker B: With the prices going up, the farmers say, let's make more. Everyone says, let's make more, they make more. Now they've overproduced again. And then that causes too much supply, not enough demand. And then we get a crash, potentially. Yeah, well, that's what happened in the eighties, I believe. It spiked, and then there was an overproduction, and then, boom, down it went. [00:06:05] Speaker A: Step three is a rise in land prices. So both in the 1920s and the 1980s, as production increased, that meant that the land was now worth more. So the price of land went up and went up high, like skyrocketed high. And right now we're seeing that exact same thing. Farmland. The price of farmland is going up. And there are a few different factors that are happening right now. I think. One, you have a migration from the coasts to the farmland in the middle of the country, which we see a lot in our local area. And then you have venture capitalists that also are speculators. Yeah, they don't even farm. They're scooping up farmland. And we've seen the headlines about Bill Gates buying all of the, however many hundred thousand acres of farmland that he's buying. So these folks that are coming in and buying farmland, be it for, you know, big farm companies or even I want to own land as a carbon offset for this other thing that I have, but we're not going to farm it. The end result of that, of a lot of outside money coming in to buy farming land, is that the land prices continue to go up. [00:07:35] Speaker B: Okay, so back up. Step one, new technology. Step two, rising crop prices. Step three, rising land prices. Step four, skyrocketing farm debt. And boy, howdy, this one, this one's just mind boggling for me, personally. Mass, historically massive borrowing in the 1920s and the 1980s, it led to farm foreclosures when prices crashed. Whenever they didn't have any money, when they weren't making anything on their crops, they had leveraged it all against their farms. They couldn't pay the debt and they lost it. That's what happened. [00:08:17] Speaker A: So the risk with the farm debt is great, right? Because that thing that is leveraged is the farm itself. And when you're in those boom years, the price of the land is going up. The amount of crops that you're growing is going up, technology is up. Like everything is up, right? And what that leads to is, man, I should grow, I should get bigger, but I don't have the cash to do that right now. But I'll borrow it. And in the seventies, especially, the United States government was on a field trip around the country telling farmers, go big or get out. Go big or get out. Like that was the drum that they were pounding. Go big or get out of. Well, in order to go big, you had to take out loans to buy more land. And all of the things were on the rise in the seventies. And so what you ended up with was huge amounts of farm debt. And then a couple of things happened. [00:09:24] Speaker B: One, we, all of the things were on the rise, right? It just busted. [00:09:32] Speaker A: Well, yeah, I mean, there were, if you look back at what happened. As things were tipping over right there, especially in the eighties, we had a we're gonna stop selling grain to the USSR decision from the president, and the land prices started dropping. And now those. The debt that you hold with your land prices up here, now your land is down here, it's no longer secured by your land, and now the banks are leveraged. [00:10:07] Speaker B: Okay. [00:10:08] Speaker A: And they start calling due their mortgage. [00:10:11] Speaker B: Of course, another thing happened in that particular timeframe. We had enormous inflation. The interest rates went up and then they went up. And so these farmers couldn't even service the interest on their loans, much less the loan itself, because the interest, every time they would refinance, the interest would be higher, and they foreclosed. In case anyone didn't know, we're kind of got an inflation problem right now. And interest isn't amazing. [00:10:41] Speaker A: No, it's not as high as it was in the eighties, but it's high. And right now, in 2024, the farm debt for 2024 is forecast to be $540 billion. Yeah. So the levels that we're approaching right now are the levels that have not been seen since the 1980s. 1980s. The farm crisis that happened in the 1980s. [00:11:09] Speaker B: So we see the storm brewing. We've got all of our ingredients, we've got all of our ingredients, and they're coming together quite nicely to make a bit of a storm here. Step five, overproduction and a price crash. So we're seeing the highest yields. [00:11:30] Speaker A: Yeah. In the 1920s, they ended up leaving crops sit in the field. They let them rot year over year. [00:11:36] Speaker B: I think that was multiple years that they were like. [00:11:39] Speaker A: Similar situation happened in the eighties. My dad grew up on a farm. We were living on a sod farm in the eighties, but down in south Florida, that oftentimes they would. They would make the decision if it cost more to get it out of the field than what it was worth to sell, they just started plowing it under. [00:11:58] Speaker B: They just plowed it under because they couldn't make any money on it. It was cheaper to just plow it under. [00:12:02] Speaker A: Right. [00:12:03] Speaker B: At any rate. So overproduction. [00:12:06] Speaker A: Yeah. Right now what we've got is we've had a huge push for corn due to ethanol being used in gasoline. And the change has happened that now the push is for electric vehicles. So the more electric vehicles come online, the less demand there is for ethanol. And you run the risk of the same thing where you've got an overproduction that causes prices to crash again. So those are the five steps that historically lead to a farm crisis. And we believe that we are seeing those same steps right now that leads us to the so what if you're not a farmer? Why do you care? [00:12:54] Speaker B: Because you buy groceries. Everyone buys groceries. And with inflation, the grocery prices are up, all of them. With rising costs of everything, it continues to go up. So the farmers have an enormous amount of debt. They've overproduced. They're getting really high yields because they have amazing technology. They're doing really well in the making food department in a lot of parts of the country. Well, if they can't afford to just carry the load and carry the cost on that, they've got to pass it on. So it's got to be passed on to the consumer overall. Somebody has to pay for it. [00:13:43] Speaker A: Yeah. The debt also is significant right now. So what happened post pandemic? The government infused a lot of money into the farming sector because of all of the supply chain issues and products weren't being able to be moved and sold, so a lot of money came in. And with that lot of money coming in again, that led to the boom and you start buying things. Well, it's gotten to the point now to where two and a half billion dollars over the past two years from the us government has been handed out for relief. The most current round of that happened recently. It is $250 million. That's going to go to a little over 4600 farms. And that is an automatic thing. These farmers don't even have to request it. It's just automatic. It's for those farmers that are delinquent on their loan payments. The government is just going to go in and pay those loans for them and bring them up to where they're current on their loan payments. The farm debt is in a place right now that the United States government has recognized that we're approaching crisis to the point that it's put in two and a half billion dollars over the past two years to just help with the past due debt. [00:15:19] Speaker C: For the past few months, farmers, ranchers, the organizations who represent them, and the agricultural banking sector have all warned of an impending crisis in farm country. Producers are struggling to make ends meet in an environment where costs for farm inputs have ballooned from inflation, interest rates have doubled and market prices are far below the cost of production. The reality is there will be fewer farmers in 2025 if Congress does not respond. [00:15:54] Speaker B: Wow, wow. [00:15:59] Speaker A: And there's nothing, nothing is happening. Nothing is going on that makes it better. There's nothing happening that says, but I will be able to make that payment next month, next year. [00:16:15] Speaker B: No, because prices are down. That's another thing that came out this last couple of weeks is the prices on the bushels, on the commodity crops, on the row crops like corn are down. There are sectors of agriculture that are up, like livestock, cattle, dairy, pork, meats are up. [00:16:37] Speaker A: Yep. [00:16:38] Speaker B: Row crops are down. [00:16:40] Speaker A: Yes. [00:16:41] Speaker B: The row crop guys who have this amount of debt and they're saddled with it, the amount of money that they hoped to make isn't going to be there this year, which means they can't plan for 25 because they have to meet their obligations from this year. They get financing year over year. They get money. They plant their stuff, they harvest their stuff, they sell it. They go to the bank and say, I'd like more money. [00:17:15] Speaker A: Yeah, I'll pay off this year's loan. Now I need next year, next year's loan. [00:17:19] Speaker B: So they, they take out the debt, is financing operations in farming. It is the way that the country has done farming business, by and large, since the 1970s. Go bigger, get out. And that is the way that it operates. Your food is grown by debt financing year over year. They go take out a loan because who's got multiple millions of dollars just laying around, right? So they go to the bank, hey, I'd like to borrow a couple million. I'm going to grow x, Y and Z. Okay, here's your couple million. They go grow it, they harvest it. Oh, no, the price is down. I'm not going to get all of that to pay that back. Oh, and by the way, the collateral on that loan was their land and their stuff. That's what secures it. And that's where we're sitting, right? Like, that's where, that's where we're teetering right now. [00:18:12] Speaker A: That becomes crisis, right? Like, it turns into farm crisis when all of that leads to having more leveraged everything and not being able to pay that off means that everything gets lost. And that's what happened in the twenties, that's what happened in the eighties. That's what we believe we're looking at happening right now, is because this debt is so high, there's so much leveraged, that it doesn't, it really doesn't take much of anything to knock that off before it all starts crumbling. And that's what we're looking at right now, though, is we're on the precipice, we're right on the edge of all of that crumbling, and there's nothing that's happening that says, oh, but it's going to get better. [00:19:11] Speaker B: Right? So not only are we looking at higher food prices, we could also be looking at some shortages because if they can't farm the land, if they can't pay off the debts, they can't get new debt, they can't farm like they farmed last year, then we go from an overproduction in food to pretty quickly you go to a food shortage and potentially a food like choices. Like you're not going to have as many choices available as to what you can. [00:19:45] Speaker A: What's there is a lot of times the edges, the fringes, the variety is grown by smaller farmers. So your big farmers, they're doing mono crops, single crops. I grow corn. I grow wheat. I grow soyez. Like, they're big, huge farms. And then what the government refers to as specialty crops, that's tomatoes and broccoli and lettuce and all of these types of things, a lot of times, not always, but a lot of times, those are grown by smaller farmers and they're affected, too. Right? Well, as, as all of this is happening, those smaller farmers, like, when they go out, they're oftentimes bought up by large farms. And that specialty crop land turns into corn or soy or wheat. So as your little farmers go out, if that land goes back into farming, it's probably being bought by a big farm and will be converted then into a monocrop. And that's where your variety issues come from. You could potentially see a decrease in variety just because those farms, when those smaller farms go out oftimes replaced by large commodity crop farms. We haven't even mentioned the climate, environmental pressures that are hitting farmers right now. But you don't have to look far to see a John Kerry type person discussing how farming is destroying the earth. [00:21:26] Speaker C: Agriculture contributes about 33% of all the emissions of the world. Emissions from the food system alone are projected to cause another half a degree of warming by mid century on the current course that we are today. And you just can't continue to both warm the planet while also expecting to feed it. [00:21:49] Speaker A: And those types of pressures also lead to issues. Right. Wherever they come from. And I don't want to get into all of the environmental stuff, but there is a lot of pressure on farmers right now from an environmental perspective that is not helping the situation either. [00:22:09] Speaker B: Right. So that's all really doom and gloom. Like, what can we do? You know, what, what can we, what can we, our family do? What can you do as a consumer and Orlando, potentially a farmer? What can we do? As we're looking at this, these are forces like, it's like watching a hurricane coming at you when you live in Florida. These are forces that they're in motion. These five steps have already been achieved. This is where we're on the brink of this situation. What can we do as consumers and citizens right now in October of 2024 to help ourselves today? Is there hope? What is it? [00:23:00] Speaker A: We believe the hope comes in your small communities, your local farmers personal relationships, knowing your farmer, knowing where your food comes from, and helping that person. Like, there are ways around the government being the answer for everything, and that includes communities stepping up and supporting each other. And we think that that's really where the future could be. I don't think it's where the future will be. But you asked, what could we do? I think the future could be that local communities support local farmers. Local farmers provide food for local communities. Like, that's where it. That's where it could be. That's what we could do. I do not think that's where it will happen. I don't think that's where we're going. [00:23:56] Speaker B: No. Because if you look at history, that's not what happened in the twenties, and that's certainly not what happened in the eighties. And I believe that'll be the answer now. [00:24:06] Speaker A: The farm crisis of the eighties, 25% of farms went away. [00:24:10] Speaker B: So there are only 2 million farms in the United States. If we lose 25% of that, the dependency on imported food, we become completely dependent on imports at a $42 billion. [00:24:27] Speaker A: Deficit right now, I'd say we're there. [00:24:30] Speaker B: You're probably right. [00:24:31] Speaker A: It just gets worse. [00:24:34] Speaker B: It boggles my mind that the United States of America in 2024 or ever, is dependent nearly like a third world country on imports from other countries so that we can eat. In case anybody wanted to know what. [00:24:54] Speaker A: I thought about that. Yeah. [00:24:58] Speaker B: Mm hmm. Okay. We can reduce our inputs as farmers by adopting regenerative practices, by growing things that are more organic, that don't require as much chemicals. It would be healthier fertilizers with your grazing animals. There are a lot of practices out there that can reduce our costs in farming, increase our yields in farming, but it would take time and it would financially hurt for a while. But that's a band aid that would have to be pulled off. [00:25:43] Speaker A: Yeah, that's why I said I don't think it will happen. The regenerative move is absolutely a way out of this. But the initial upfront costs are really high. To change an operation from a conventional row crop mono crop operation to a regenerative farm that uses ruminant animals and grazing operations to increase your soil health. I mean, like the whole thing, it is expensive, it takes time. It is not easy. And when the government continues to step in with two and a half billion. [00:26:31] Speaker B: Dollar bailouts, there's no incentive to change. [00:26:35] Speaker A: The incentive for change is lower. Right? Like you have to have something well up inside you, basically that I want to do things different or better for whatever the reason is. Thus I'm going to move to regenerative farming, which we think would be great. It would be very good. But right now, over the past two years, 46,000 farms have received an average of like $55,000 in farm aid. Yeah. To help them just get current on their debt. And so, like, if you can't even get current on your debt, how do you change your operation? Like, you can't, you can't say, like, not that you can't. It's very difficult to say, I'm not going to grow this corn. I'm going to instead put in, you know, thousands to hundreds of thousands of dollars worth of fence and plant grass that I can now graze. You know, like how do you, how do you get out of the cycle? You already can't repay the debt that you owe. Like you're about to lose the farm already. Like there's no, the government is stepping in and paying your, your mortgage. Like there's, there's no available cash to then say, I'm, I'm changing my operation. [00:28:10] Speaker B: Right. Well, there could be debt forgiveness and say, hey, if you take on new practices, you get your debt forgiven so that you can go and start something new. Because we do still need farmers in. [00:28:25] Speaker A: This country, which is something else that even a consumer could do would be to watch the policy that's happening in agriculture, learn about what's happening with agricultural policy, and talk to your, your representative, your senator, even local politicians to say I support regenerative agriculture and whatever it takes to make that happen, let's do it. Let's add government money to switch from conventional to regenerative instead of adding government money to just pay the banks. [00:29:02] Speaker B: Right? [00:29:03] Speaker A: And then if you're using that money to then improve the land and switch the practices that improves the environment, that makes everything better. Like you're actually, it feels, at least to me, more like you're investing that money and not giving it to a banker. I mean, right now, the money that's coming from the government is either repaying a government loan so the government is repaying the government, or it's repaying a banker. So that $2.5 billion yes. The farmers didn't have to pay that money, but it went straight to either the government or the bank. I love the idea of maybe using that money to help convert things to a more regenerative style of growing things. [00:30:00] Speaker B: Yes. Stop investing in the thing that doesn't work. [00:30:03] Speaker A: So, y'all, history often repeats itself. [00:30:06] Speaker B: It does. And we're on the brink and. But we're hopeful because there are regenerative farms that are popping up just like ours here. Air to ground farms. We have a viewer. His name is Tom. He's an organic farmer, regenerative farmer. He farms all of the things, big, small, all of it. There are people in this country who are doing things to make the land better. They're doing things to make farming more sustainable, and they're doing things to make healthier, cleaner food. All we got to do is continue the, you know, basically pounding our, you know, beating our drums and go find that food. [00:30:46] Speaker A: Yeah, but the bottom line is we think food crisis, or, sorry, farm crisis is coming. Food prices are increasing. [00:30:56] Speaker B: That's right. [00:30:57] Speaker A: And I don't. I don't see a way out of it. [00:30:59] Speaker B: I don't either. Hope you guys enjoyed this podcast. I don't know if we did, but we thank you for hanging out with us again today. And until next time, bye, y'all. [00:31:11] Speaker A: Bye, y'all.

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