Food Prices Rising: Time to Go Vegan?

(MoneyWatch)  If you've yet to pick up your Thanksgiving turkey at the grocery store, get ready for some food inflation sticker shock. The price of turkey is up more than 30 percent over last year. And if your family is set on having pecan pie for dessert, you'll be shelling out 41 percent more for pecans. For economizers out there, start looking for celery-centric recipes, as the price of that veggie is 35 percent lower this year.

According to one survey, the all-in price of cooking Thanksgiving dinner this year will be 8 percent higher than in 2009. And it looks like this price inflation isn't just some short-term seasonal blip. While overall U.S. inflation is still flat-lining, the official food price forecast from the U.S.D.A. suggests food costs in 2011 will be about 3 percent higher on average, and beef and dairy prices could rise 5 percent. General Mills and Kraft have recently announced plans to start raising prices on some of their food goods.

That's not exactly welcome news as household income hasn't gone much of anywhere. But hey, if it helps any, it's only half as bad as China's food price inflation, which shot up 10.1 percent in October, compared to a year earlier.

Here's some, er, food for thought on why we'll all likely be paying higher prices for food in 2011:


The Supply Side: Bad Weather
As MoneyWatch blogger John Keefe recently explained, a drought in Russia (a major wheat producer), coupled with devastating summer fires, a dry summer in the U.S., and way too much rain in Canada and Europe, produced less-than-bumper crops for all types of grains. That's sent some food commodity prices up 15 percent to 40 percent this year. And a basic rule of Farming 101 is that when basic grain prices rise, so too, does the cost of feeding livestock. In fact, the Food Institute attributes the sharp rise in the price of Thanksgiving turkey this year to a 56 percent rise in feed costs.


The Demand Side: Emerging Markets
Consumers in fast-growing emerging economies such as India and China now have the wherewithal to purchase more food. And unlike unpredictable weather patterns, this increasing demand is expected to put persistent pressure on food prices in the coming years. The United Nations' Food and Agricultural Organization forecasts that inflation-adjusted prices for wheat and grain could jump 15-40 percent over the next 10 years compared to the 1997-2006 period. Inflation-adjusted dairy prices could rise 16 percent to 45 percent.



Advice for 2011: Go Vegetarian, or Better Yet, Vegan:

Despite the sharp run-up in food commodity prices this year, U.S. Secretary of Agriculture Tom Vilsack recently said that overall food price hikes in 2011 will be a fairly moderate 2 percent to 3 percent. While that's not a budget-busting jump, it is about double what we've experienced in 2010. And based on the 2011 food price forecast from the U.S.D.A., you might want to stock that back-up freezer in the garage with a few items that are anticipated to rise well above the general rate:

• Beef and veal: So much for deflation. The USDA expects prices for beef and veal to increase 3.5 percent this year, and rise another 3.5 percent in 2011.
• Pork: An expected 4.5 percent to 5.5 percent rise in pork prices in 2010 will be followed by another 3 percent to 4 percent rise in 2011.
• Dairy Products (other than eggs): After rising 1.5 percent to 2.5 percent in 2010, the USDA is forecasting a 4.5 percent to 5.5 price increase on dairy products in 2011.

Add that up and you might want to consider a Bill Clinton turn to veganism.

But let's remember to keep this all in perspective. Despite the sticker shock when paying for this year's turkey, food has never been less expensive. According to the USDA, the percentage of household disposable income spent on food has fallen from 10.2 percent in 1999 to 9.5 percent at year-end 2009. During the 1970s recession and the early '80s recession, by contrast, food gobbled up about 13 percent of our disposable income. And as MoneyWatch's Sarah Lorge Butler recently discovered, it's still possible to feed a family of four for about $10 a day. So maybe things aren't quite so bad after all.

Photo courtesy of Flickr user dodo_anji
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