Food Check-off

Indiana Farm Bureau NEWS RELEASE April 8, 2011 For more information: Isabella Chism, 317-692-7803 Kathleen Dutro, 317-692-7824, kdutro@infarmbureau.org Grocery prices continue slow climb Grocery store prices increased during the first quarter of 2011, according to the latest market basket survey from Indiana Farm Bureau. The total cost of the food items in the informal survey was $47.20, up $1.97 or about 4 percent compared to the fourth quarter of 2010. Of the 16 items surveyed, 13 increased in average price while three decreased compared to the prior quarter. The Indiana survey is part of a nationwide survey compiled by the American Farm Bureau Federation from data supplied by state Farm Bureaus. A total of 71 shoppers in 29 states participated in the latest survey, conducted in February. Twenty-three volunteer shoppers participated in the Indiana survey. AFBF’s survey had results similar to those found in Indiana, showing a total cost of $49.07, up $2.10 or about 4 percent compared to the fourth quarter of 2010. Despite the increase, though, food prices remain below those of 2008 when the market basket hit a new record price of $50.70 for the 16 items. The reasons for the increase in food prices, said a Purdue University agricultural economist, are grain shortages, Middle East turmoil and extreme weather in critical crop-producing regions. These have combined to send retail food prices higher this year, explained Corinne Alexander. “When we buy our groceries each week we notice even the smallest increases but we forget all the non-food costs that affect that increase – packaging, transportation, processing and utilities to name a few, all of which are affected by our increasing petroleum prices,” said IFB 2nd Vice President Isabella Chism. “In the long run, increasing our energy independence could in the long run have a positive effect on food prices as well as fuel prices.” In the Indiana survey, sliced deli ham, flour, shredded cheddar cheese, orange juice and ground chuck increased the most in dollar value compared to the fourth quarter of 2010: Ham increased 73 cents to $5.52/pound, flour increased 42 cents to $2.53 per 5-pound bag, shredded cheese increased 38 cents to $4.02 per pound, orange juice 37 cents to $3.26 for a half gallon and ground chuck increased 33 cents to $3.10 per pound. Other items that increased in price since the fourth-quarter survey were vegetable oil, up 29 cents to $2.90 per 32-ounce bottle; potatoes, up 22 cents to $2.81/pound; cereal, up 13 cents to $2.99 per 10-ounce box; apples, up 11 cents to $1.52/pound; boneless chicken breasts, up 9 cents to $3.27/pound; white bread, up 4 cents to $1.55 per 20-ounce loaf; sirloin tip roast, up 2 cents to $3.81/pound; and eggs, up 2 cents to $1.57/dozen. “As anticipated, the increased consumer demand for meats and dairy products that began in 2009 and continued through 2010 remains evident as we look forward to the middle of 2011,” said John Anderson and economist with the American Farm Bureau Federation. Despite the overall increase in dairy prices in Indiana and nationwide, whole milk was one of the three items that decreased in price on the Indiana survey, dropping by 20 cents to $2.85/gallon. The largest decrease was bagged salad, which dropped by 62 cents to $1.91 for a 1-pound bag. Bacon also decreased, dropping by 36 cents to $3.60 per pound. Most items showing an increase in retail price from quarter-to-quarter also showed year-to-year increases. Compared to one year ago, sliced deli ham was up by 88 cents, potatoes by 66 cents, bacon by 63 cents, ground chuck by 62 cents, flour by 55, orange juice by 47 cents and boneless chicken breasts by 42 cents. “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,” Anderson explained. Although the market basket survey is informal and intended to represent only a snapshot of Indiana’s grocery store prices, the year-to-year direction of the market basket survey tracks with the federal government’s Consumer Price Index (www.bls.gov/cpi) report for food at home. The Farm Bureau market basket also tracks with the trends noted by ag economist Corinne Alexander. American consumers can expect to spend about 4 percent more for food this year than in 2010, she said, adding that beef, pork and poultry products likely will see even greater price hikes. U.S. food price inflation reached 7.5 percent in September 2008 before falling in November 2009. It’s been moving back up ever since, she said. "We're returning to a period of food price inflation after coming off a period where we saw food price deflation," Alexander said. "We don't expect this to be a long-term, permanent higher food price period. We'll see these higher food prices until we rebuild global stocks of the primary crops." As retail grocery prices have increased gradually over time, the share of the average food dollar that America’s farm and ranch families receive has dropped. “In the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average,” said Anderson of the AFBF. “Since then, that figure has decreased steadily and is now about 16 percent, according to the Agriculture Department’s revised Food Dollar Series.” USDA’s Food Dollar Series may be found online at http://www.ers.usda.gov/Data/FoodDollar/app/.