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TMCNet: Food prices have soared by the highest rate in 18 years

[May 16, 2008]

Food prices have soared by the highest rate in 18 years

(South Florida Sun-Sentinel (KRT) Via Acquire Media NewsEdge) May 15--It pains Victoria Neil to serve her two young children milk at only one meal a day now, substituting water for the other two. It also bothers her to give them applesauce instead of fresh apples.

But that's the reality when you're a single mom with two growing kids facing the biggest jump in food prices in 18 years. Cutting out expensive items, such as steak, isn't enough to make ends meet. Neil, a court reporter from Boca Raton, has noticed it's the basics that are driving her grocery bills up.

Bread. Dairy products. Even rice, that old reliable meal stretcher. Neil said she is used to spending about $150 a week on groceries, "but now I don't get that much for that $150 any more."

Federal statistics released this week show grocery prices in South Florida were up 7.2 percent last month over the previous year -- the biggest annual increase in any major metropolitan area surveyed. The national average was 5.9 percent.

Between March and April of this year, food prices jumped 0.6 percent -- the biggest month-to-month leap since 1990. Almost 9 cents out of every dollar a South Florida household spends now goes to food eaten at home.

Some food products have not changed much in price from a year ago. Meat and poultry prices rose very little. And canned tuna is virtually the same as last year.

But foods made with grains, rice, dairy products and eggs posted double-digit increases over the past year, according to the federal Bureau of Labor Statistics. A loaf of onion rye bread purchased at a South Florida Publix in May 2007 for $2.39 now costs $3.65 -- a 53 percent increase. A dozen large eggs from a local Winn-Dixie, that went for $1.59 last year, now cost $1.99 -- 26 percent more. And a pound of plum tomatoes went from 99 cents to $1.29, a 30 percent hike.

In the year ahead, experts predict local prices will continue to rise as long as fuel prices remain high. One reason: Much of the food that winds up on Sunshine State consumers' tables must be trucked in from other areas of the country.

"Those loaded semi-trailers suck a lot of diesel by the time they get to Florida," said Marvin Hayenga, a professor emeritus at Iowa State University who specializes in agricultural products marketing.

Coping & coupons: What can you do?

Bud Chalecki's solution to grocery sticker shock? He changed his eating habits and his lifestyle, cutting his $130 weekly food bill by 50 percent. First, he planted a garden. Then he took all the doors off his pantry cabinets, so he could easily see inside. He now checks his inventory before he goes to the market.

"When you go shopping, you are kind of impulsive," said Chalecki, a contractor who divides his year between his house in Pennsylvania and his live-aboard boat docked in Fort Lauderdale.

Other options:

Coupons: Coupon-clipping is back in style -- with a modern touch. Now Web sites allow consumers to browse manufacturers' coupons, select their favorites and print them out. Couponwinner.com, started two years ago by California-based SurfMyAds.com, has doubled its users in the past few months, according to product manager Lenka Keston.

The average coupon-user can save 11.5 percent on their grocery bills, according to the Promotion Marketing Association.

Store brands: Publix and Whole Foods markets find more consumers are buying the stores' own brands, saving 10 to 30 percent on national labels.

Whole Foods also recently introduced a new line of grill-ready kabobs, and may add more items designed to be put straight into the oven. "What we hear is our customers are eating out less and want to cook at home more," said spokesman Russ Benblatt.Discounters: Warehouse retail outlets, such as Sam's Club and Costco, are becoming more popular with consumers looking to save by buying in bulk.

Nelson Mongiovi, director of marketing for the Florida Department of Agriculture and Consumer Services, has heard of two or three families sharing a membership and doing one shopping trip for all, splitting up the groceries when they get home.

Shop smarter: Lesley Ware, a senior editor with Consumer Reports, advises applying for the preferred customer cards some supermarkets offer that provide extra savings. She also said to skip "the cute little cut-up broccoli and carrots," and other pre-sliced convenience foods; they're more expensive.

And be aware that the store layout is designed to tempt you, she added. Highly -visible items on aisle ends or display baskets usually are not a good deal.

Why food prices are going up

What's driving food price hikes is a complicated mix of rising oil and energy prices, the global economy, the weather, and shifts in our nation's crop production.

Higher fuel prices: Gas prices are at record highs, making it more expensive to transport commodities and to produce foods that take a lot of energy to make, such as baked goods.

Crop production: Farmers increasingly are planting corn and soybeans and then selling these crops to make ethanol, as demand for biofuel rises. So less is available for food. Farmers are switching from wheat to corn crops, given the demand. That fact, coupled with a drought last year, equals wheat shortage and higher prices, said Hayenga.

Global economy: Foreign countries, dealing with their own food shortages, are eager to buy grains and raw agricultural materials from the U.S. Farmers can charge more overseas, to make up for the weak dollar, and still get their price, Mongiovi said. And household incomes are rising in Latin America and other foreign countries, meaning more consumers can afford better quality food.

Multiple factors: The food items showing double-digit increases over the past year tend to be those hit by multiple factors. Bread, which has seen a 14 percent average price increase, depends on grains and requires energy-intensive heat to make. Eggs, up 30 percent, are produced by chickens that eat grain-based feed, and take a lot of space to transport.

What's ahead?

Some agricultural experts' predictions:

Meat prices will rise: Meats and poultry, items consumers tend to cut back on in hard times, so far have seen small price increases. Beef and veal prices are up only 0.1 percent this past year, and poultry is up 4.6 percent. But Hayenga expects that will change within the next year or two. "Beef markets always are slow to react and major poultry companies already are losing money hand over fist," he said.

Processed food will get more expensive: Americans love the convenience of shelf-stable processed foods. But corn syrup is used in most of these products, meaning they will cost more.

Higher prices will be sustained: Grocery costs did not suddenly drop when the country exited the last food inflation cycle in the 1970s, when prices were rising 9 percent annually, Mongiovi said. They just leveled off. "I don't see us ever going back to $1 for a loaf of bread," Mongiovi said.

The good news: Certain fresh fruits and vegetables may start looking like a bargain, next to processed and grain-based foods, Mongiovi said. That might encourage families to eat healthier.

Staff Researcher Barbara Hijek contributed to this report.

To see more of The South Florida Sun-Sentinel or to subscribe to the newspaper, go to http://www.sun-sentinel.com/.

Copyright (c) 2008, South Florida Sun-Sentinel
Distributed by McClatchy-Tribune Information Services.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

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