Contact: Casey Langan, Executive Director of Public Relations, 608.828.5711
Energy costs continue to impact grocery bills
MADISON – Retail food prices grew just over three percent during the second quarter of 2011 according to the Wisconsin Farm Bureau’s Marketbasket Survey. The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $49.49. It marked an increase of $1.49 (3.1 percent) from the $48 Marketbasket price in March, and $3.88 (8.5 percent) since December.
“Food prices are riding a wave we’ve seen since the beginning of the year,” said Casey Langan, Wisconsin Farm Bureau spokesman. “Steady price growth continues for many food items due to factors ranging from high energy costs to strong global demand.”
Of the 16 food items surveyed by Farm Bureau members, 12 increased in price compared to the first quarter of 2011. Potatoes increased 21 cents (9.3 percent) to $2.47 for a five pound bag. The increase is attributed to low supplies and delayed planting this spring due to cool, wet weather in key growing regions. This scenario encouraged marketers to bid aggressively for remaining supplies.
Bacon, sirloin tip roast, boneless chicken breast, milk and toasted oat cereal were the other items that saw the largest percentage increases in price over the last three months.
* Bacon increased 45 cents (10.7 percent) to $4.64 per pound.
* Boneless chicken breast increased 34 cents (9.3 percent) to $4.01 per pound.
* Whole milk increased 30 cents (8.8 percent) to $3.71 per gallon.
* Toasted oat cereal (Cheerios) increased 20 cents (6.6 percent) to $3.25 per box.
* Sirloin tip roast increased 25 cents (6.3 percent) to $4.22 per pound.
Relatively tight global supplies and healthy consumer demand contributed to modest price increases for bacon and sirloin tip roast. Strong consumer demand for protein continues to come from the emerging middle classes of China, India and Brazil.
A reason for tight supplies is a reluctance by American pork and beef farmers to increase their herd sizes due to the higher input costs they must pay for corn and soybeans. Therefore, higher meat prices are often linked to the recent rise in global prices for corn and soybeans.
“A competitive advantage that Wisconsin livestock and dairy farmers have over their counterparts in other parts of the country is that many of them grow their own crops for feed,” Langan said. “This makes them less vulnerable to volatile shifts in the grain market, especially for our state’s $26.5 billion dairy industry.”
“The impact of higher than normal grain prices doesn’t pack quite the punch here in Wisconsin compared to other states whose dairy industries were built on the idea of cheap corn,” Langan said. “An up tick in price for dairy products reflects some recovery from the historically low prices of 2009.”
Also of note, widespread drought in key cattle producing regions will contribute to a further delay in beef industry expansion.
Another factor for the nearly across the board increase in food prices is that energy prices have rose steadily through 2011. According to the U.S. Department of Energy, retail diesel prices increased from about $3.39 per gallon in January to about $4.05 per gallon in May. Energy prices are expected to remain high and volatile through the rest of the year.
Apples, shredded mild cheddar cheese, eggs and vegetable oil were the four items that saw reductions in price since the first quarter of 2011. One dozen large, Grade A eggs decreased by 3 cents (2.3 percent) to $1.27. The falling price over two consecutive quarters marks a return to normalcy after eggs saw a big run-up in price in late 2010.
WISCONSIN PRICES LOWER THAN NATIONAL AVERAGE
Wisconsin’s $49.49 Marketbasket is $1.68 less than the American Farm Bureau Federation’s national survey of the same 16 food items. AFBF’s survey rang in at $51.17. Despite the lower overall price, five of the sixteen items recently surveyed in Wisconsin were higher than the national average: bacon, ground chuck, toasted oat cereal, boneless chicken breast and whole milk.
Compared to a year ago, the total price of the national survey was up nearly $4 (about 8 percent). Last summer the Wisconsin Farm Bureau altered its food items to mirror the national survey. Of the 12 items on Wisconsin’s current and previous second quarter surveys, their overall price jumped from $32.32 in 2010 to $35.97 in 2011. The $3.65 increase marks an 11 percent difference.
Over the last three decades retail grocery prices have gradually increased while the share of the average dollar spent on food that farm families receive has dropped. In the mid-1970s, farmers received about one-third of consumer retail food expenditures in grocery stores and restaurants. Since then that figure has decreased steadily and is now about 16 percent, according to the U.S. Department of Agriculture’s revised Food Dollar Series. Using that percentage across the board, the farmer’s share of this quarter’s $49.49 Marketbasket would be $7.92.
Despite expected higher prices, Americans will still spend approximately 10 percent of their disposable annual income on food, while many other nations spend between 25 and 50 percent, according to the USDA.
The Marketbasket Survey is a quarterly look at the trends in food prices in Wisconsin in relation to changing farm prices, weather and wholesale and retail food marketing. Members of the Wisconsin Farm Bureau collected price samples of 16 basic food items in 20 communities across Wisconsin in May.
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The Marketbasket Survey is an informal measure of prices at grocery stores in Wisconsin. The prices reported reflect variations in communities and retailers. The prices reported are not validated by any outside source. Prices were collected for this survey in the communities of Appleton, Ashland, Beloit, De Pere, Edgerton, Fond du Lac, Hillsboro, La Crosse, Lancaster, Marshfield, Medford, Menominee, Mequon, Richland Center, Sauk City, Saukville, Shawano, Waterford, Watertown and West Bend.
