The Food Industry’s Economic Landscape: Insights from Andy Harig of FMI

Shelby Publishing’s Maggie Kaeppel recently sat down with Andy Harig, the Vice President of Tax, Trade, Sustainability, and Policy Development at FMI – The Food Industry Association. The aim was to discuss the economic context surrounding the food industry after the Annual Meat Conference held from March 2-4 in Baltimore, Maryland.

Current Forces Impacting Food Prices

Energy prices continue to be a major concern for the food industry. While gas prices have seen declines, home energy costs have surged due to increased demand from data centers, which puts pressure on the energy grid. This issue is critical as food production is heavily energy-dependent—from transportation to packaging and distribution.

The U.S. Department of Agriculture (USDA) monitors the “food dollar,” which breaks down consumer spending on food. Energy costs have risen significantly, contributing to overall food price inflation.

Recent geopolitical tensions in the Middle East could further exacerbate this situation. If issues persist beyond several weeks, the food supply chain could experience significant disruptions, including rising energy costs and various indirect costs associated with shipping and insurance. As a result, price volatility in the food market remains prevalent, making it challenging to forecast consistent price trends.

Forecasting Inflation in the Food Sector for 2026

After witnessing peak inflation in 2022-2023—the highest since the 1980s—the food industry has observed a slight calming of pressures. For many consumers, this period marked an unprecedented experience of “sticker shock,” as inflation rates previously hovered around 2% for the past two decades, which is atypical when we look historically.

While inflation seems to be stabilizing, it is essential to note that deflation—where prices actually decrease—does not typically occur within the food industry. Historical precedent shows that deflation is often linked to economic downturns and demand destruction.

Supply Chain Dynamics Influencing Food Costs

Labor challenges persist in the food industry, although improvements have been noted. Transportation costs have seen some relief, but freight rates are still rising faster than inflation, indicating ongoing logistical pressures. These factors contribute to the overarching volatility in food pricing.

Key Economic Indicators for Industry Leaders

In the next six to twelve months, food industry leaders should monitor energy prices and labor force participation rates closely. Understanding these indicators will help gauge worker availability and the potential need for automation within operations.

Additionally, while not a direct economic indicator, weather patterns remain unpredictable and significantly impact agricultural output, especially for fresh produce. Early signs suggest a balanced growing season, but adverse weather events can quickly change this outlook.

Opportunities Amid Cost Pressures

Despite ongoing cost challenges, there are significant opportunities for growth, especially in promoting home-cooked meals as a more affordable and healthier option. The intersection of value-driven and health-conscious consumers provides a unique market niche that can be tapped into effectively.

Moreover, there is a rising trend towards prepared meals with transparent and healthy ingredients which cater to busy lifestyles. Meeting consumer demands for convenience while ensuring affordability will be key in navigating the current economic landscape.