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The Thanksgiving guest that no one invited: Inflation

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NPR reports that wholesale turkey prices have jumped 23 percent from a year ago.

Everything from labor shortages, high energy costs and avian flu are putting a strain on the holiday shopping list.

NPR reports that wholesale turkey prices have jumped 23 percent from a year ago. And the USDA says more than 6 million turkeys have died from the virus or have been “depopulated” due to avian flu exposure.

“It's a big shock when you have that much of a market unavailable because of something we didn't expect, like the avian flu,” said Dr. Jim Kroes, professor at the College of Business and Economics at Boise State University.

Kroes visited with Morning Edition host George Prentice to talk about how American families, after two years of COVID-driven distance, are now feeling a different tug – in the pocketbook.

Read the full transcript below:

GEORGE PRENTICE: It is Morning Edition Boise State Public Radio News. Good morning. I'm George Prentice. We need Thanksgiving….whatever you want to call the day…it is a really good day to thank someone, anyone, especially in their presence. But our homespun rituals that are Thanksgiving come at a price every year. And this year? Well, our guess is it could be a challenge. Which is why we've invited Dr. Jim Kroes back to the program. He's a professor at the College of Business and Economics at Boise State. Dr. Kroes, good morning.

DR. JIM KROES: Good morning, George. Thanks for having me.

PRENTICE:  Where do we start? Maybe the challenge of food… and what you might be able to tell us about supply chains and all of the other factors that will drive the price of our Thanksgiving food.

KROES: Sure. It's a little overwhelming to look at this because there's so many factors that influence it. But specific to food, I guess the good news is grain production and grain kind of drives. A lot of our food prices are actually up for the US. And I think Canada had a pretty good year as well. But the downside of that is with the uncertainty from the war in the Ukraine. Grain…international grain prices… are up, so we're exporting a little more grain. So, it's kind of putting it on the domestic supply to some degree when Russia and Ukraine basically export about 20% of the world's grain. It just puts uncertainty in that market and that's going to lead to higher prices.

PRENTICE: So can I pause you there? Because I think that's a really good point. So many people think, well, “That's not coming our way”, but it's the bigger it's the market, Right? That impacts everybody.

KROES: Correct. You know. You can't look at it as just a US issue. It's a global issue right now with everything going on, you know, not just the war, but fuel prices, which also contribute quite a bit to food prices. You know, when you see OPEC cutting production just a few weeks ago, it's going to keep prices up, unfortunately.

PRENTICE: And the strength of the dollar…some people get very excited about that when they travel, but that there's a challenge there, too, right? Especially imports and exports.

KROES: It does. You know, the dollar's definitely up against the euro and some of the Asian currencies. It's not it hasn't increased as much against Canada and Mexico, which is where a lot of our food trade comes from. So, it's not going to have as big an impact as we had hoped, I think.

PRENTICE: And then, of course, there are the factors that are totally out of our control. And I'm thinking of especially the environment and what that can do to…well, just about any market.

KROES: Correct. Know, I think Thanksgiving in particular, the avian flu that's hitting the Turkey market right now is I think what I read is about 15% of the turkey production had to be eliminated because of the flu, and that's driving up prices. And I've seen Turkey price increase estimates from 20% all the way up to 75% higher than they were last year.

PRENTICE: And that's so interesting because for years, I don't know if spoiled is the right word, but I think to some degree we have been spoiled because Turkey prices have always been modest, if not affordable.

KROES: It's a big shock when you have that much of a market unavailable because of something we didn't expect, like the avian flu.

PRENTICE: I'm always curious about some real-world conversations that you might be having. What we're experiencing here in Idaho, as far as the supply chains, etc., is there anything you can bring home to us? Because you touch base with all kinds of interesting people?

KROES: Sure. You know, it's not all gloom and doom. One of the big factors that have been influencing prices nationwide and here locally is the cost of trucking and whether that's driven by a labor shortage in the trucking industry. And I talked to Scott Thompson, who's a vice president at Giltner Transportation, and he informed me that hiring is actually getting a little better. They're getting better candidates. There's kind of been a shift in the market from small, independently owned truck carriers to them working for these larger companies. So, I think the trucking congestion issue hopefully will get a lot better over the next quarter or two. And just in general, rates have decreased a little bit from where they peaked earlier this year. So I think there's some hope on the trucking front.

PRENTICE: It's interesting because NPR just recently reported on a bigger push through our trade schools and to get younger drivers behind the wheel and then possibly to allow them to cross state lines.

KROES: Yeah, you know, it's not new. This shortage of truck drivers has been going on since well before the pandemic. You know, and it's incredibly high turnover industry. I saw an estimate that some firms are experiencing 95% turnover per year and that's because a lot of drivers get into it and realize it's really hard work and they leave the industry and then just such demand, that's easy to find a higher paying job. So. It led to this dramatic situation where you could lose 95% of your workforce in a year.

PRENTICE: And it gets really personal really fast as we approach December 24th. And that doll is not on our doorstep for our daughter.

KROES: Correct. And I think another encouraging thing is manufacturing is up and for a lot of the toys and things that we want to buy for Christmas come from Asia. And port congestion is actually gotten a lot better over the last few months. The wait time that ships spend waiting to get unloaded has decreased quite a bit. So that is a good factor. The other factors that manufacturers seem to have learned from COVID and they're carrying a little more raw material inventory and they're better prepared for the next disruption. So, the shortages that we saw over the last couple of years hopefully will decline. But the downside of carrying more inventory is it's going to cost a little bit more. So, it's kind of a tradeoff that a lot of firms are appear to be making.

PRENTICE: That's one of the few times I can remember hearing about something that we've actually gotten smarter on. And in the wake of… well, it was pretty close to a crisis a year ago.

KROES: It was. It was, and that's not to say we're out of the water. You know, there's still a chip shortage worldwide. Know China still has lockdowns for COVID, where entire manufacturing districts might shut down for periods of time. So, there are risks out there. But at least companies are trying to be a little more risk averse and doing some things to reduce that or mitigate that risk.

PRENTICE: That business page gets very personal really fast for us. And when we've got Dr. Jim Kroe available for a few minutes, it's always better. We're always just a bit smarter. And he is a professor at the College of Business and Economics at Boise State. Jim, happy holidays to you. Thank you so very much. And I always look forward to our next conversation.

KROES: Thank you so much, George. I really appreciate you speaking with me.

Find reporter George Prentice on Twitter @georgepren

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