Contact: Casey Langan, Executive Director of Public Relations, 608-828-5711
Weather, energy costs and global demand impact your grocery bill
MADISON – Retail food prices grew 5 percent over the first three months of 2011 according to the Wisconsin Farm Bureau’s Marketbasket survey. The Wisconsin Farm Bureau’s informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $48. It marked an increase of $2.39, or 5.2 percent, from December’s $45.61 Marketbasket price.
“Food prices are on the climb for a variety of reasons including bad weather, rising energy costs and strong global demand for U.S. products,” said Casey Langan, Wisconsin Farm Bureau spokesman. “While this jump in the survey’s overall grocery bill doesn’t come as a surprise, it’s important to also note that we are coming off a year that saw modest changes in food prices.”
Last year’s Consumer Price Index for food was up just eight-tenths of 1 percent, the lowest annual increase since 1962, according to the USDA Economic Research Service.
Of the 16 food items surveyed by Farm Bureau members, 14 increased and two decreased in price compared to the fourth quarter of 2010.
Apples, milk, flour, ground chuck and bagged salad were the items that saw the largest percentage increases in price compared to the end of 2010.
* Apples increased 24 cents (18 percent) to $1.52 per pound.
* A gallon of whole milk increased 50 cents (17 percent) to $3.41 per gallon.
* One pound of bagged salad increased 33 cents (15 percent) to $2.48.
* A five-pound bag of flour increased 25 cents (12 percent) to $2.34.
* One pound of ground chuck climbed 32 cents (10 percent) to $3.41.
WEATHER WOES
A streak of cold weather across the southern United States and Mexico destroyed much of the winter vegetable supply, sending their prices skyward in February. This explains the survey’s higher prices for a bag of salad. Growers in Arizona, which grows much of the nation’s winter lettuce, saw two straight days of temperatures below 20 degrees. The overall result was the biggest one-month increase in American food prices at the wholesale level since 1974. Food prices over the course of 2011 are expected to rise 3 to 4 percent, according to the U.S. Department of Agriculture’s Economic Research Service.
While produce prices are expected to come down again, the same cannot be said for the price of many meat products.
MARKET IS HUNGRY FOR MEAT
The prices for meats, poultry and fish combined at grocery stores rose 7.2 percent from February 2010 to February 2011, according to the U.S. Labor Department’s Bureau of Labor Statistics.
Higher meat prices can be linked to the rise in global prices for corn, soybeans, wheat and other commodities over the past year. Higher corn and soybean prices mean greater input costs for farmers who raise cattle and hogs. Higher feed and energy costs have resulted in relatively fewer cattle and hogs on U.S. farms as farmers cannot justify increasing their herd sizes. The resulting tighter supplies of beef and pork have driven up their costs. This is coupled with strong demand for meat from the emerging middle classes in nations like China, India and Brazil.
“Retail price increases for some foods are likely to continue throughout the year, as it takes time for farmers to increase the size of their herds to accommodate increased demand,” said John Anderson, an economist for the American Farm Bureau Federation.
Eggs and boneless chicken breast were the two items that saw reductions in price since the fourth quarter of 2010. The average price for boneless chicken breast fell by 21 cents (5 percent) to $3.67 per pound. One dozen large, Grade A eggs decreased by 24 cents (15 percent) to $1.30. The decrease 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 $48 Marketbasket is more than $1 less than the American Farm Bureau Federation’s national survey of the same 16 food items. AFBF’s survey rang in at $49.07. Despite the lower overall price, six of the sixteen items recently surveyed in Wisconsin were higher than the national average: apples, ground chuck, sirloin tip roast, bacon, boneless chicken breast and vegetable oil.
Compared to a year ago, the total price of the national survey was up $3.53 (about 8 percent). Last summer the Wisconsin Farm Bureau altered its food items surveyed to mirror the nation survey. Of the 12 items on Wisconsin’s current and previous surveys, their overall price jumped from $31.60 in early 2010 to $34.51 in early 2011.
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.
That information may be found online at http://www.ers.usda.gov/Data/FoodDollar/app/.
Using that percentage across-the-board, the farmer’s share of this quarter’s $48 Marketbasket would be $7.68.
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 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 collect price samples of 16 basic food items in 26 communities across Wisconsin. The mix of food items in the survey was changed in mid-2010 to match the national survey taken by the American Farm Bureau Federation.
