Diesel Prices Explode; Are Your Grocery Bills Next? | Joel Salatin

**Joel Salatin** (0:00)
I think that there is going to be continued price pressure at the grocery level. The ugly truth is, the world doesn't need the soybeans it's producing, it doesn't need the corn we're producing. Half the soybeans in the US are exported, half the corn goes into ethanol, and half the alfalfa goes to Japanese and Saudi Arabian racehorses. So the fact is that a large, large portion of American agriculture doesn't even produce food. I mean, even if everybody, even if every cattle farmer today said, we're not going to double tomorrow, we're not going to see those animals in the slaughter, in on the retail shelf for almost four years.
That's a long cycle.

**David Lin** (0:40)
Diesel goes up by 61%.
Do you think grocery stores will be forced to just absorb some of the cost? Or do you think this means immediately we're going to see higher prices on the shelves? Well, in general, right now, grocery prices cost nearly 32% more than they did in January of 2020
Because the Iran War is heating up once more and escalations are arising, crude oil prices are also soaring, and diesel is now at 564 a gallon, up 61% from 352 just January of this year. It's closing in on its record price. This is important because diesel trucks move 83% of America's farm products, so every gallon increase directly impacts food prices on our table. Fertilizer is following the same upward trend due to the Iran War, and 7 in 10 crop farmers could not afford to buy all the fertilizers they needed this year. Farm bankruptcy rates have been soaring this year as a result. Meanwhile, beef prices continue to go up since cattle herds in America are now at a 75-year low, and the US has increasingly relied on beef imports over the past couple of years. Trump, last week, signed an executive proclamation allowing 300,000 metric tons of beef to enter the US duty free starting September 1st. But will this be enough to tame prices? Our next guest, Joel Salatin, co-owner of Polyface Farms in Virginia, wrote Monday in response to the Trump administration's policies to appease cattle farmers that we don't need money, we need freedom. So will farmers get the freedom that they deserve? And what happens next to food prices? Welcome back to the show, Joel. Good to see you again.

**Joel Salatin** (2:20)
Thank you, David. It is a delight to be with you.

**David Lin** (2:23)
I like to start by talking about diesel and fertilizers. Today's conversation will be to analyze food price trends overall, but let's start with some current news. As you're aware, oil prices started erupting once more this week after the Iran war escalated with both sides, Iran and the US, upping their exchange and military conflict. Both sides have been bombing each other, and as a result, the 10-year treasury yield went up due to higher inflation expectations, due mostly because of the fact that Brent crude is now at $96 a barrel.
As part of my introduction, I stated that diesel is an important input cost to trucking. Across America, trucking is very important for the delivery of food. What's going to happen next with food prices if we do not see the de-escalation of the Iran War? Let's assume that diesel prices remain high.
How does high diesel prices translate to high food prices? Can you just explain that mechanism here?

**Joel Salatin** (3:26)
Yeah, it's a great, great question. So the average morsel of food in America travels 1,500 miles from field to plate. That's the average. Some, of course, are farther. If you have lettuce from California going to Maine, of course, it's a lot farther than 1,500 miles. But the average morsel of food takes 1,500 miles to get to our plates. And roughly 4% of the calories on the plate are fuel, transportation fuel.
So, the total of 15...
What am I looking for? The 15 calories of energy it takes to put 1 calorie. Here it is.
I was confusing some different stats. All right. That's all right. It takes 15 calories of energy to put 1 calorie of food on your plate. Four of those 15 calories are diesel fuel for transportation. Yeah. Yes, it is a significant cost pressure on food. And the question is, how much can the big companies absorb?
And what will this do in the food supply itself? One of the most exciting things right now is that logistics have become so efficient through Amazon Prime and UPS and FedEx and things, that door-to-door delivery is starting to chip away at the stranglehold of the supermarket. There are more and more people now that I kind of watch and listen to, that are saying that the era of the supermarket may be limited because of the super efficiency of door-to-door logistics. Now, interestingly, door-to-door logistics are actually competitive to supermarket stashing because in door-to-door delivery, you can electronically aggregate rather than aggregate in a place that's publicly acceptable, bricks and mortar retail interfaces. The cost of maintaining physical bricks and mortar interfaces has escalated dramatically in the last five years, while the cost of doorstep delivery has decreased dramatically in the last five years. So what we're seeing is the ability of small producers, of homesteaders and small producers, that don't live in a city or they're out on a dirt road like our farm is. We can now, if we can get on a UPS truck, we can get into any urban center in America. Listen to this, David. We can now, and our farm is in the boondocks here on a dirt road in Swope, Virginia. We can now ship eggs to any urban center in America cheaper than they can buy them at farmer's market.