Bulging Grocery Bills Fed By Global Forces

Higher Grain Prices, Packaging And Fuel Costs Add To Rise In Food Prices

(CBS)  This morning, your bowl of cereal and milk probably cost you 49 cents. Last year, it was 44 cents. By next year, it could be 56 cents. It's enough to make you cry in your cornflakes.

The forces behind the rise in food prices - China's economic boom, a growing biofuels industry and a weak U.S. dollar - are global and not letting up anytime soon. Grocery receipts are bulging because the raw ingredients, packaging and fuel that go into the price of foodstuffs cost more than they have in decades.

It's the worst bout of food inflation since 1990, but not yet worrisome to the economy, said John Lonski, chief economist of Moody's Investor Service. While high food prices can cut into consumers' discretionary spending, the 4 percent rate of food inflation is still far below the crippling double-digit levels of the 1970s.

Still, consumers anxious for relief in the checkout line may have to keep waiting.

Andrea Williams, 32, can track the rise in prices of the food she buys for herself, her husband and their three children by looking back at the receipts she says she meticulously saves.

"In 2004, I bought a gallon of milk, it was a $1.63," Williams said before heading into a Wal-Mart in Savoy, Ill., about 140 miles south of Chicago.

A gallon of milk cost nearly $3 a gallon last month in her area.

A couple of years ago, Williams would spend about $250 a month on one big grocery trip. Now she says she's spending $250 on big trips every two weeks.

It's possible to trace the jump in food costs to the commodities markets, where the price of agriculture products and energy have reached multi-decade highs this year. Crude oil, which helps dictate the price of gasoline and plastic packaging, hit an all-time peak in September. Wheat prices also climbed to a record.

The run-up in commodity prices has as much to do with short-term supply and demand in each market as with long-term shifts in who produces and consumes those products.

China is the juggernaut. Rapid growth there - and in Brazil, Russia, India and other developing nations - has led to massive demand for raw materials, including energy to run factories and cars, metals to build infrastructure and beans and grains to feed livestock and people. China will import almost 50 percent of the world's oilseeds within a decade, becoming the world's largest importer, according to estimates from the Organization for Economic Cooperation and Development.

Oils made from oilseeds such as soybeans are used widely in packaged foods, while corn is used to make high fructose corn syrup, a ubiquitous sweetener found in everything from soda to bread.

China's oilseed demand reflects another trend: The world is using more of its food supply to make fuel. Corn in the United States and China is being converted to ethanol, a gasoline additive. Europe is using more wheat for ethanol and rapeseed for biodiesel, a cleaner burning fuel that is mixed with regular diesel. Brazil has bulked up its production of sugarcane to make ethanol.

Demand for corn from the burgeoning ethanol industry in the United States helped drive corn prices to a peak earlier this year, setting in motion a domino effect of price increases through the food chain as livestock raisers, food makers and retailers tried to recover costs.

Corn prices have come off their high due to expectations for a huge crop this year, but prices remain historically elevated because of inflation across the agriculture market. A bushel of corn that went for about $2 a couple of years ago costs about $3.50 today.

[hermit22]

in the first half of the last century great grandma and grandpa could bring milk and eggs into town and TRADE for staples....basic good food and a couple of yards of cloth for Grandma. now if the food doesn''t have plastic wrap on it, the consumer thinks its missing something. i would love to have a job rutting up these boring looked green postage stamp yards and see that people began planting gardens instead.Grandma Jones could grow a corn crop in her sunshine yard, and trade with mrs. smith who can grow letuce in her shade yard....
something would have to be done about car fumes blowing on Ted''s tomatoes. eeeekk!
price of food being what it is, why are 65% of americans too fat?

[hermit22]

drinuk, who at school knows how to cook?
they''ve been feeding kids soda and junk food for years. maybe YOU should start up a program.

[drinuk]

CONT. It may also be a good idea to make it mandatory that schools teach kids to Cook !! How many women under 30 are capable of taking good wholesome produce and turn in a good dinner seven days a week ? If there is a serious downturn half of ''em would have trouble turning on the stove, let alone boiling a pot of potatoes.

[drinuk]

The blame for this inflation lies squarely on the shoulders of the Supermarkets, they "Shaft" local producers thus driving them out of business or into alternative produce. More farmers should set up cooperatives selling directly to the public and we in turn should boycott Wal Mart, Publix and the rest corporate thieves. It should not be beyond this country to re-establish the "Milk Round" of daily deliveries, same with bread, fresh vegetables and fruit. We do NOT need 90% of the junk so temptingly paraded before us in Wal Mart, what we Do need is good honest fresh food and to fully support our own growers and producers. If they stopped moaning, got off their backsides and we the public got behind them we would at best sort out obesity and the chemical junk from which we all suffer, not to mention inflation.

[michellem99-2009]

I like snidegrass'' verses as he puts alot of truth in them. He does say it like it is.

[shanev137]

and btw...snidegrass rocks.

his posts are hilarious and educational.

[shanev137]

Like I predicted years ago, this commodities ripoff is a direct result of $3 gasoline from hurricane Katrina and Bush''s fear-mongering in the Middle East to keep oil prices sky high.

[michellem99-2009]

We are on fixed incomes. snidegrass. yer verse said it. Let be thankful for that one slide of bread as that is all we may soon eat if that. The greed oh how it hurts.

[peguesplace]

The people feeling the pinch at the grocery are the ones who have the lowest incomes, the ones who were just barely making it. I expect to see an increase in the people seeking government aid. Retirees are gonna be among the ones hurting the most..
Farmers are paying more for fertilizers, herbicide, "Round-Up Ready" seeds, diesel fuel, tires, etc. than in any time in the past. And are more restricted in tillage practices than ever before..
And the profit margins for the small farmer are less than ever.. bigger farms are more economical. kinda like an agricultural Wal-Mart situation, where the little guys can''t be competetive but so long..

[pwrslm]

Do any of you realize the USDA is encouraging farmers to grow more food stuff rather than the traditional crops. That is to keep prices down and quality up. I am a woman farmer and most of the men farmers around here tell me well we have always down it this way. What is so hilarious, prices are up but still ridiculously low for the producer. Ask the farmer who is making the BIG DOLLARS, it sure isn''''t the farmer.
As far as becoming totally self sufficient, I am talking about the USA, we are completely capable of doing that but the politicians and big business won''''t buy it.

Posted by BarbJC1

The big super grociers, walmart, albertsons, king soopers, winn dixie and others across the nation, have killed the economy by elimination of all of our local distribution networks.

If they cant get food from the field to the cities, millions could starve to death. The farmers in each state cant even deliver to thier own markets anymore. Its the Governments fault. The closed thier eyes and let it happen.

Big Brother is no longer a dream, he is here.

[pwrslm]

Things that happen in the economy sometimes take a generation to appear, from the cause to the effect.

We havent seen the whole of the NAFTA results yet, nor of Chinese imports, nor of the rising costs of Fuel.

In 10 more years, we will see what it has done. Food costs spiraling is just the beginning.

Greenspan really did a number on us. When the FEDS did nothing to cap the bugeoning prices of houses, they damaged America, and we may not do so well because of it. Billionairs were about non existent just 10-15 years ago. Today, they dominate the top of the forbes richest in America.

The dollar is going to crash, HARD.

Are you ready?

[s1ckd09]

The shame of it all is that ethenol costs more energy to produce than it saves, resuting in a net loss. Who''''s the idiot that came up with pushing this idea? Oh yeah, Bush.
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Posted by WogerWabbit at 06:43 PM : Oct 08, 2007

The ethanol push has been around long before Bush, idiot. It has been pushed by environmentalist idiots for decades, and wrongly, as the answer to our energy problem.

[likeitis5050]

And farmers, real farmers, not the corporate hogs who lease large areas to grow and sell to other countries, are still getting....nothing. Big business too busy feeding other countries for pennies a day to take care of the hungry here.

[barbjc1]

Do any of you realize the USDA is encouraging farmers to grow more food stuff rather than the traditional crops. That is to keep prices down and quality up. I am a woman farmer and most of the men farmers around here tell me well we have always down it this way. What is so hilarious, prices are up but still ridiculously low for the producer. Ask the farmer who is making the BIG DOLLARS, it sure isn''t the farmer.
As far as becoming totally self sufficient, I am talking about the USA, we are completely capable of doing that but the politicians and big business won''t buy it.

[tnt1954]

i''ll take a hike pretty soon. one more blast.
as we sit down around the tv table to watch
all the bad news they give us constantly in
the press, constant negativity, we''ll have
a graham cracker blessed by billy graham, and
you can then find a scapegoat to blame all your
problems on you caused yourselves. prohibition now.
i didn''t print this news, the media did. constant
bad news. no news is good news, but there is always
plenty of news. go mow the lawn.

[wogerwabbit]

None to worry, mediapreachr... nobody reads snidegrasse''s posts anyway. As soon as I see his name I know it''s more of the same old air head nonsense he always posts and skip right by it. I''m sure anyone else familiar with his trivial mind does the same. If not, you should... your time is surely too valuable to waste your time reading that tripe.

[mediapreachr]

Does anyone notice that some people keep posting *** and you have no room to post or they break the chain of reasoning-it''s called spamming-people behind the name of snidegrass and co.

[danstoned]

But according to the jinGOPigs in the White House, there is no inflation! And to think that 28% of Americans still support the jinGOPigs? This fact does not say much for Americans, does it?

[slim1h2o]

keep the food here. kick out the
illegals. protectionism. it''''ll cause a war,
but we''''re already in one, so what''''s the difference.


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Posted by snidegrass at 08:56 PM : Oct 08, 2007

I agree, but we''ll be in a war here, before much longer!

[tnt1954]

if they''d use the land to grow food, not marijuana
or coca leaf or grain to make billions of bottles
of booze then prices might come down to tolerable
levels. do you realize how much land is used
to grow grapes for wine. government bureaucrats
need their fine food and wine, and they always
say make it snappy. they''re holding the royal
flush, we got the job of sewer inspectors.
the soviet union was destroyed by vodka and
a lack of toilet paper. and the people on the
kibbutzes just refused to ship food to the cities,
so the city people started raiding the rural
kibbutzes, so they had to ''reorganize''. a people
with a full stomach usually do not riot or revolt.
ever seen a food riot up close? solution?
high tariffs, keep the food here. kick out the
illegals. protectionism. it''ll cause a war,
but we''re already in one, so what''s the difference.