A Dog-Eat-Dog Economy: Pet Food Shortage Hits United States

Thanks to national supply chain bottlenecks and labor shortages, American pet owners are having a “ruff” time finding pet food.

According to a report from The Wall Street Journal:

Shortages of labor, raw materials and transportation are crimping the human food supply, from beverages to snacks. The challenge is the same for pet food, and is even more acute, supermarket executives say, because of the sudden high demand. More people have adopted pets during the Covid-19 pandemic, and pet owners are buying bigger volumes of food. Pet-food sales at supermarkets grew 6.9% over the past 52 weeks ended Nov. 27, compared with 2.3% for food overall, according to research firm NielsenIQ.

The crunch is putting some pet owners in a bind — particularly those whose pets require prescribed food or have dietary restrictions. Dogs and cats often get attached to a specific brand or flavor of food, pet owners said, and can have physical reactions if forced to change.

The Wall Street Journal added that companies are warning of shortages that may last until 2023:

Many supermarkets, unable to find substitutes, are leaving pet-food shelves empty. Pet-food manufacturers, struggling to secure ingredients and expand production, have signaled that shortages could persist. J.M. Smucker Co. notified retailers in November that it would limit shipments of some pet-food products through January 2023, citing transportation challenges with the supply of wet food — which typically uses imported ingredients.

Freshpet Inc., which makes refrigerated dog food and dry food for cats, is expanding its suppliers of turkey and plastic film, used in packaging, and has added production capacity, said Chief Executive Billy Cyr. But equipment for new production lines is getting held up at ports, and construction materials are running low, he said.

Beyond pet food, American consumers are witnessing tremendous inflation in grocery items. Meat, poultry, and fish prices have risen 13.1% since November 2020, while milk and produce prices are up 4.6% and 4%, respectively.

Last week, the Penn Wharton Budget Model — a nonpartisan public policy research initiative at the University of Pennsylvania’s Wharton School — found that record-high inflation is requiring the typical American household to spend around $3,500 more in 2021 to achieve the same level of consumption as in previous years. Less advantaged families are experiencing relatively higher financial burdens:

Since higher-income groups had a bigger increase in expenditures in all categories, they also saw a bigger increase in total expenditure. For example, the bottom 20 percent saw their total expenditure go up by $2,064 (under the fixed 2019 bundle) while the top 5 percent saw an increase of $8,326 (under the fixed 2019 bundle). Assuming the fixed 2020 bundle, these increases change to $2,160 and $7,636 respectively.

However, because of variation in the composition of consumption bundles, we find that higher-income households had smaller percentage increases in their total expenditure. Higher-income households spent relatively more on services, which experienced the smallest price increases. On the other hand, lower-income households spent relatively more on energy whose prices had large increases.

Although nominal wages are rising, price levels are rising faster. The Bureau of Labor Statistics recently stated that “real average hourly earnings” — a metric that considers the impact of inflation on purchasing power — fell by 0.4% between October and November. Though nominal average hourly earnings rose by 0.3%, the effects were overshadowed by a 0.8% increase in consumer prices.

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