As 2011 comes to a close, I am continuing my research into the life line of the economy and how it affects the food and beverage industry.
My local traffic barometer has been ratcheting up—that’s always a good sign of a recovering economy in my book. I am happy to report the highway traffic in my area has been approaching pre-recession levels over the past two months. Hopefully, all of these commuters are out there working and shopping.
On a more proven, scientific note, this year our industry witnessed a fantastic PACK EXPO Las Vegas and a new biennial PROCESS EXPO that doubled both in size and attendees.
Even though many signs are pointing toward economic recovery, Food Engineering’s annual survey on the State of Food Manufacturing reports processor budgets for production, process and packaging equipment are flat, and there is actually a slight decrease in spending for automation and software. The good news is all of those lean initiatives must be paying off—the same survey respondents said their throughputs are expected to increase, some in double digits.
So, with capital budgets fairly stable and production units up, why are food prices so high for consumers? The answer lies in an intricate mix of factors including higher costs of raw materials and transportation, bad weather, smaller harvests, a weakened dollar and globalization of the industry.
Some experts believe American economic woes lie in wealth inequality. According to a recent report in Businessweek, “inequality is not just a problem for the have-nots.” The report states with the recent $650 billion in income shifted to the top 5,934 households, the result could be shorter recoveries and gun-shy investors. It also cautions there are recovery lessons to be learned about market similarities and defaults in 1929 and 2008.
Just a little something to think about over the holidays. Here’s hoping the food industry barometer and our overall economy continue to rise in 2012.
