Pam Lewison: Food prices are high, but will go higher with new costs

By Pam Lewison

This Thanksgiving, you might get some time off work, but you won’t catch relief from lower prices. Food prices are up more than 11%in 2022, and Washington is ranked in the top-10 most expensive states to buy a turkey this year. While this is bad news for shoppers, it’s good news for farmers, right?

Wrong.

Often farmers and ranchers negotiate their price contracts at the beginning of the farm year. Those contracts are then locked in for the entire year, regardless of how costs change, including wages, fuel and insurance. As price takers, Washington’s farmers and ranchers cannot renegotiate their contracted price in answer to market fluctuations. As we move into the holiday season, some of the cost increases from this year and late last year will be reflected in the price of groceries but not in farm and ranch incomes.

In 2021, the farmer’s share per pound of turkey bought was about 6 cents on average. Hardly the stuff dreams are made of.

In addition to helping feed the world, Washington’s agricultural sector is among the state’s most vital economic sectors. More jobs are tied to Washington’s agricultural sector than Microsoft and Boeing combined. So if we as a state want to keep that sector healthy and prevent higher prices, we need the leadership of the whole of the state to understand how it works and what adds to the sector’s cost of doing business.

To change grocery price trends here in Washington state, we must focus on how to lessen input pressures that add to the cost of doing business for our agricultural sector. For example, workers’ compensation rates were increased at the beginning of 2022 and the Washington State Department of Labor and Industries is taking comments on another increase to workers’ compensation rates in 2023.

The average proposed rate increase statewide is 4.8% . L&I, however, plans an increase to workers compensation rates for agricultural jobs by an average of 6% next year with some rates jumping by as much as 14% depending upon worker classification.

L&I counts 30,471 full-time equivalent people employed in orchards throughout the state. “Orchards” represent the largest number of employees under L&I’s agriculture risk classifications. They will see their rates increase by 8% , should the proposed changes go through. For workers, that equates to $31 per paycheck and $123 per paycheck paid by employers.

Food manufacturing and processing are expected to see an average increase of 4% . The average deduction increase per paycheck is $16.70 for employees and $111.50 paid in by employers for that same pay period.

Food manufacturers and processors will pass those costs on to their customers: grocery stores, restaurants, and other food wholesalers. That cost increase will work its way through the supply chain to individuals.

The rate increase will contribute to increasing food costs. In September, grocery prices were 13% higher than just a year ago and takeout prices were 8% higher. With fuel, employee pay, electricity, and almost every other form of overhead costing more in 2022, food manufacturers and sellers have increased prices to cover their payments.

The proposed workers’ compensation increase will do the same if it is not stopped.

There is a solution on the table. Washington state should allow employers and employees to buy workers’ compensation insurance from a private provider rather than the state.

Washington is one of just a handful of states that holds a monopoly on workers’ compensation.

Most states allow people to choose what sort of workers’ compensation insurance they wish to purchase, making the overall price less expensive. By opening the market to as many providers as possible, premiums should go down, making workers’ compensation insurance far more affordable for everyone and stopping the continual increase in costs seen here in Washington state.

We have much to be thankful for. We live in a beautiful state, and we in the east live in the most beautiful part of it. Our lands allow us to produce abundance like few places in the world.

But we need to get better at connecting what we do in the east, with those who govern in the west.

With this challenge is opportunity. I’ll be thankful when we can find a way.

Pam Lewison is the director of Washington Policy Center’s Initiative on Agriculture and an active farmer. She is based in Grant County. Members of the Cowles family, owners of The Spokesman-Review, have previously hosted fundraisers for the Washington Policy Center and sit on the organization’s board.