Here’s what you need to know about the most important recent happenings in food production:

  • Farm bill negotiations continue to roll as industry groups call their shots.
  • Food prices seem to be stabilizing, but remain a dominant topic.
  • Manufacturers and channels have mixed performance in a fickle earnings cycle.

Craving Carve-outs

Industry groups have spent the past month hashing out their priorities for the 2023 Farm Bill — which funds nutrition assistance programs as well as farm policies. Now that both chambers of Congress have established committee rosters, negotiations will begin in earnest.

  • In Food Fix, Helena Bottemiller Evich explained Republicans’ plan to reduce funding for the Supplemental Nutrition Assistance Program (SNAP, aka food stamps) to help balance the budget. Plans to cut $70 billion may sound like a lot, but it will barely make a dent in the $31 trillion budget shortfall.
  • Contrarily, the National Grocers Association advocated for expanding access to food stamps, including for online grocery purchases.
  • The National Pork Producers Council requested resources to combat foreign animal disease and increase market access overseas (Pork Business).
  • The Organic Trade Association called for updates to the standards and enforcement of the National Organic Program as well as a larger role in climate-smart agriculture policies.
  • A cornucopia of produce industry groups joined forces to lobby for research and insurance resources for specialty crop producers. Farmers who grow apples, berries, potatoes and tomatoes get a relatively small piece of the pie compared with grain producers.
  • The United Food and Commercial Workers International Union championed provisions to “modernize health and safety standards in our meat packing plants” and require country of origin labels on packages (Meatingplace).
  • Activist group Farm Action hosted its Food Not Feed Summit on February 9, arguing that current subsidies disproportionately benefit the livestock industry.
  • When it comes to timing, DTN political correspondent Jerry Hagstrom quoted Rep. Frank Lucas (R-Okla.): “I am not holding my breath about getting it done by October 1, but we will get it done.” Our over/under pool is set at Christmas Eve.

“Like making sausage, the 2023 Farm Bill isn’t something that you will want to look at.”

Dan Flynn, Editor, Food Safety News

Inflated Expectations

Inflation may be slowing down, but media coverage of it isn’t. Here are some quick takes on how food prices are evolving lately:

  • Letup in grocery price inflation continues in January | Winsight Grocery Business
  • Americans think grocers’ profits are 14x higher, inflation twice as high as in reality | Progressive Grocer
  • American consumer retail sales jump as Americans defy inflation and rate hikes | PBS NewsHour
  • Egg prices drop for retailers, but shoppers yet to see relief | The Wall Street Journal
  • Is Florida running out of orange juice? Record prices put the squeeze on consumers | The Guardian
  • How inflation impacts the salty snack market | Mintel
  • Public willing to pay more for meat in January | Feedstuffs

‘Hit in the Mouth’

A slew of earnings statements hit recently, as manufacturers and channels held shareholder events to explain what’s happening. In many cases, input costs, price inflation and labor shortages have made it increasingly difficult for manufacturers to predict demand and sales of their products.

  • JBS poultry subsidiary Pilgrim’s Pride reported $155 million in losses in Q4, citing low cutout values, market volatility and inflation for input costs such as grain and labor (Supermarket Perimeter). For those in the know, cutout value is the approximate value of a total unit (such as a whole chicken) based on the prices received for its respective parts.
  • Starbucks closed its fiscal Q1 with record-breaking success. Outbound CEO Howard Schultz mentioned sales, gift cards and mobile app downloads as contributors (Nation’s Restaurant News).
  • CNBC summarized Coca Cola’s 4th quarter revenue, which exceeded $10 billion, and that higher prices have not softened demand. Also, Food Dive covered Coke’s shaky integration of the BodyArmor sports drink brand.
  • For PepsiCo, Food Manufacturing went right out and said it: “Price Hikes Fuel 10% Jump in Pepsi Sales.”
  • Yahoo! Finance reported that Chipotle missed its expected earnings in the fourth quarter. “The cost of foods, packaging and beverages weighed on the company this quarter, accounting for 29.3% of total revenue.”
  • Kellogg’s beat estimates and also announced it would retain the Morningstar plant-based brand it had planned to sell. Reuters reporter Mehr Bedi suggested, “Americans have so far taken price hikes for snacks and breakfast cereals in stride even as decades-high inflation forces consumers to dial back spending.”
  • Food Business News listened in to Bunge Foods’ earnings call to hear the agribusiness giant is expecting a sluggish year.
  • On-premise leader Aramark reported positive earnings and a big jump in revenue. Shortly after, The Wall Street Journal tracked an 11% drop in share price, citing a $30 million contingent liability. Talk about a fickle market.
  • Subway reported some positive news: same-store sales rose 9.2% over last year (Nation’s Restaurant News).
  • Reuters’ Tom Polancek recapped Tyson CEO Donnie King’s February 6 earnings discussion. King said Tyson “took a hit in the mouth,” citing Tyson’s struggle to forecast demand for beef and poultry amid high inflation and the worst-ever outbreak of avian flu.

Worth Reading

Loyal Spies

The Markup posted a deep dive on supermarket loyalty cards and elaborate data systems behind them. “When you use supermarket discount cards, you are sharing much more than what is in your cart — and grocery chains like Kroger are reaping huge profits selling this data to brands and advertisers.”

‘Tacit Collusion’

NPR’s Planet Money podcast dished on why Ben & Jerry’s ice cream flavors are typically chunky and why Haagen-Dazs flavors are smooth. “As Christopher Sullivan of the University of Wisconsin-Madison suspects, the two companies may be engaging in what is known as ‘tacit collusion,’ where two parties silently agree to … stick to their own territory.”

Not Quite There

Business Insider described a foodservice use case for AI: menu photos. Using OpenAI’s text-to-image tool, restaurant tech company Lunchbox is seeking to help restaurants with the tricky task of making the photo look like the actual menu item. But it’s proving a bit trickier than just generating text: “It cranked out four images, including a burger with light blue buns, giving them a moldy look. Another picture showed an artisan-looking burger with a thick slice of blue-colored cheese.” We can misread “bleu cheese” as “blue cheese” on our own, no AI needed.

‘Barley Men’ looked at the diets of the historically best athletes in the world to find they ate mostly vegetarian diets. Author Michael Greger looked at ancient Roman gladiators and the modern Tarahumara Indians, who run as many as 150 miles in a ball-kicking game. “The Roman gladiators were known as the ‘barley men.’ Did they eat barley because it ‘gave them strength and stamina,’ or just because barley was a common, ‘basic food’ people ate at the time — not necessarily for performance, but because it was cheap?”

Culinary Diplomacy

The chef-activist is out, the chef-diplomat is in. The James Beard Foundation partnered with the U.S. State Department to “use food and hospitality as tools to engage with other nations on the global stage.” The arrangement created the American Culinary Corps, a group of 80 esteemed culinary professionals from 27 states. They can call us if they want to create an American Gustatory Corps, too.