From milk to meat, US food prices spike upward
The rise in grocery costs is up more in the first six months of 2007 than in all of 2006.
from the June 13, 2007 edition
Page 2 of 3
In a welcome response, US farmers told the government in April they plan a record-breaking 93-million-acre corn crop, though its true size won't be known until the end of June. But corn alone does not explain the number of products that have become more expensive of late.
Facing higher costs at the farm and shareholder pressure to maintain profits, companies such as Tyson Chicken and Coca-Cola are raising prices. The fact that fuel prices remain relatively high hasn't helped either, allowing no break in the cost of transporting perishable goods.
For fruit and vegetable growers, labor shortages are also a factor. A $2 cantaloupe sold for $3 at the South Carolina Farmer's Market in Greenville recently, largely because of labor woes, says Thompson Smith of the South Carolina Farm Bureau. Winter cold snaps and hard freezes in California and the Southeast have made peaches, apples, and oranges pricier.
In the heartland, low yields on winter wheat mean cookies and baguettes are more expensive. Meat costs are up by 15 percent in some regions, in part because of drought that, as in Alabama, caused a cattle sell-off. Milk prices are up in part because of a global shortage, with milk exporters such as New Zealand unable to add capacity and Australia enduring a debilitating drought, even as demand rises in Europe, China, and India.
Because of the multiple causes, some prices may drop in coming months and as new crops come in, says Patrick Jackman, an economist at the Bureau of Labor Statistics, which tracks grocery store costs in population centers across the country. A few years ago, he says, iceberg lettuce spiked 113 percent after a freeze. Today, a head of iceberg is one of the few items to decrease in price – from $1.19 to 99 cents.
Still, household budgets are taking a "double whammy" at the grocer's and at the gas station, says Mr. Jackman. Barrels of sweet crude are expected to stay at about $60 per barrel. A family's average grocery tab could leap from $300 a month last year to $400 a month this year, economists say. "People have to adjust by cutting back," he says.
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