Will the dockworkers’ strike cause higher food prices? Experts weigh in

Longshoremen unions on the East Coast and Mexico's Gulf Coast began a strike Monday that will affect the flow of goods through ports that handle about half of seaborne trade to the United States and could impact food prices. be.

The ports affected by the International Longshoremen's Association strike are important hubs for food imports from countries such as South and Central America.

For example, about two-thirds of bananas arrive at East Coast and Gulf Coast ports.

The United States Department of Agriculture (USDA) issued a statement Tuesday saying it does not expect food prices to be significantly affected by the port strike in the short term.

“Based on our analysis, we do not expect significant changes in food prices or availability in the short term,” the USDA said. “Thanks to normal smooth movement between cargo ports and strong domestic production of agricultural products, we do not expect shortages for most items in the near future. Similarly, containerization, including grain Bulk export cargoes that are not exported are not affected by this strike.

“For meat and poultry exported through East Coast and Gulf ports, available storage space and redirection of product to alternative domestic and international markets will relieve some of the pressure on farmers and food processors. You can.

“We are keeping an eye on downstream impacts in the West and will continue to monitor and work with industry to address potential impacts.”

Alexander Field, an economics professor at Santa Clara University's Leavey School of Business, told FOX Business that fresh produce will be one of the product categories most vulnerable to price increases and shortages caused by strikes.

“If there's going to be an impact… it's going to be fresh produce and perishables. It's a direct impact, as opposed to other categories like cars and trucks, machinery, furniture, clothing, etc.,” Field said. said.

“However, if the strike lasts longer, which is likely to happen, it will lead to shortages. Shortages will create upward pressure on prices and inflation will rise. And if this situation continues, unemployment will rise. may rise and GDP growth may slow.

“Retailers typically have enough inventory to handle short-term disruptions, but most Companies do not have enough inventory to meet demand for long periods of time, especially over several weeks. This is especially true for perishable items such as bananas, which have a limited shelf life.

Babich added that companies could reroute shipments or use alternative methods such as air transport, but there were also “significant risks” in the supply chain.

“Prolonged disruption at U.S. ports due to both the strike and the ensuing congestion could send shockwaves through global supply chains, even for products not directly affected by the strike. “We may see opportunistic price increases by some retailers, panic buying and hoarding by both businesses and consumers,” Babich said.