Bulging Grocery Bills Fed By Global Forces

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

(CBS)  Higher commodity costs have led Kellogg Co., General Mills Inc., Kraft Foods Inc. and others to hike prices this year. Kellogg boosted prices 5 percent in April based on weight; in June, General Mills shrunk cereal package sizes in a way that had the effect of lifting prices. Starbucks Corp. decided to charge more for lattes and other drinks to cover its milk costs.

"Ethanol got us started down this line, but other things moved to the forefront," said Darrel Good, professor of agricultural economics at the University of Illinois.

This year, such tectonic shifts in demand have met with shorter-term supply constraints to exacerbate the inflation. Because the markets for raw materials are often linked - both across geography and with each other - problems in one market can spread to another.

Take soybeans. When U.S. farmers planted more corn this year to meet demand for ethanol, they devoted less acreage to soybeans. That has squeezed soybean supplies and helped push prices up more than 40 percent since the year began. Soybeans recently cost as much as $10 a bushel, up from $7 a bushel in January.

Or witness the wheat market. A failed crop in the Ukraine started prices rising sharply in the United States. The situation snowballed as one wheat crop after another worldwide was damaged by either too much rain or too little, leaving foreign buyers frantic to stock their shelves. Global stockpiles have dwindled to a 26-year low and sent prices surging higher. In Italy, consumer groups staged a symbolic pasta protest last month over the rising price of the country's wheat-based staple.

A bushel of wheat recently topped $9.50, nearly 90 percent more than it cost at the start of the year, when wheat traded around $5 a bushel.

In addition, a weaker U.S. dollar has raised foreign demand for commodities, which appear cheaper to buyers abroad. The greenback tumbled earlier this month to an all-time low against the euro.

"All along the chain, you're seeing price inflation," said Standard & Poor's Chief Economist David Wyss. "It's a significant impact on food prices, but it takes a long time to show up."

High commodity prices tend to trickle slowly down to the consumer as growers, food manufacturers, distributors and retailers each swallow a portion of the added cost before passing a chunk of it on to the consumer. But with costs up for more than a year the trickle-down process is under way.

The Labor Department reports food inflation is running at 4.2 percent annually, twice the rate of overall inflation. Nationwide, milk prices are up 18 percent since the start of the year, while eggs cost 35 percent more than they did a year ago. The USDA estimates overall food price inflation will run 3 percent to 4 percent in 2008.

The big picture, at least in the United States, is that higher food prices don't hurt like they used to. Today, about 8.5 percent of the American household budget goes to food at home, down from an average of 19 percent of the total budget in 1960, Wyss said. While food inflation is high, it's not hyperinflation, he said.

But it's enough for some shoppers to notice and alter their habits.

Talking in a parking lot a stone's throw of two corn fields, Andrea Williams said she's cut back on buying beef, and steaks in particular, and she's begun scanning grocery advertisements for sales.

"That's basically my meal planner," she said. "If pork chops are on sale, guess what's for dinner?"

[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.
------------------------

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.


--------------------------------------------------------------------------------

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.