Wisconsin Farm Bureau Federation: Fourth quarter 2009, retail food prices continue to fall

Web site link: http://www.wfbf.com/media_center/market_basket.aspx

Contact: 608-836-5575

Farm Bureau’s Market Basket survey shows fifth consecutive quarter with decline

MADISON – Wisconsin’s largest farm organization tracks the retail price of 20-food items in 26 communities. The Market Basket survey found the average cost of those 20-items in the fourth quarter of 2009 was $51.49, 61-cents less than the overall average of $52.10 in the third quarter of 2009. The average cost in the fourth quarter of 2009 is $6.41 or 11-percent less than the fourth quarter of 2008. In that quarter the Market Basket average was $57.91

The decreases throughout 2009 can be attributed to some primary marketplace conditions. The biggest factor is lower fuel and energy prices. The decrease seen in energy costs in 2009 impact every stage of food production. Lower energy prices result in less cost for production, processing, transportation, and storage of food. Over the past year, U.S. fuel and energy prices decreased 28% according to the U.S. Bureau of Labor and Statistics Consumer Price Index (CPI). A second major factor is continued sluggish consumer demand as reported by the American Farm Bureau Federation (AFBF).

The item with the largest percent decrease in the fourth quarter was butter. A pound of butter cost $2.48 in the fourth quarter, nearly 24-percent less than the third quarter retail price of $3.26. Although prices paid to farmers for milk have increased slightly through the second half of 2009, butter has a longer storage life than milk. Butter sold in the fourth quarter is most likely from milk produced earlier in 2009. Also the Wisconsin Farm Bureau Federation (WFBF) made a change in the type of butter surveyed. Surveyors are now allowed to use the store brand of butter rather than a premium brand name. That change alone would cause a slight decrease in the price of butter reported. A gallon of whole milk did track more closely to the farm prices for milk. The retail price for a gallon cost 13-cents more than the third quarter with a fourth quarter price of $2.72. This is 53-cents less than the fourth quarter 2008 price of $3.25. A pound of cheddar cheese was $3.94 in the fourth quarter of 2009, just 7-cents more than the third quarter of 2009 and 22-cents less than the fourth quarter of 2008.

Potato prices were also down significantly in the fourth quarter. A 10-pound bag of Russet potatoes was $2.98 in the fourth quarter, 42-cents less than the third quarter and $1.33 less than the same time last year. “Potato prices are seeing the effect of supply and demand just as we saw in 2008,” says a WFBF spokesman. “Potato prices saw large increases in the second half of 2008 when flooding and lower yielding harvests reduced the supply. In 2009, the U.S. potato harvest set a yield record, increasing supply, with less flooding in Wisconsin and the rest of the Midwest.”

Pork continued to see low retail prices. A pound of pork chops was $3.21 in the fourth quarter, down 28-cents from the third quarter of 2009 and down 47-cents from the same time last year. Bacon, flour, and sugar also decreased in this quarter’s survey.

The price for a pound of tomatoes was up 44-cents in the fourth quarter of 2009 at $1.83. Retail prices for chicken breasts and whole chicken both increased as well. Ground sirloin and sirloin tip roast saw almost no change from the third quarter of 2009.

According to the United States Department of Agriculture, the average price farmers received for their products from November to December of 2009, as well as compared to a year ago, remained flat or showed negligible changes.