[audio:http://www.wdde.org/wp-content/uploads/2014/04/FoodPrices.mp3|titles= Delaware Public Media's Tom Byrne discusses rising food prices with contributor Eileen Dallabrida.]
Margaret Price has a beef with the price of sirloin steak.
“You can’t help but notice that prices are up,” says the retired teacher from Wilmington. “Everyone talks about grocery bills going up, but there is not a lot of talk about wages going up.”
Beef is leading a stampede of cost increases at the supermarket, followed by many common items on the grocery list, including milk, eggs, bacon and orange juice.
The U.S. Department of Agriculture predicts prices for groceries will rise between 2.5 percent and 3.5 percent this year. In 2013, prices barely budged, rising less than 1 percent.
In contrast, federal workers will receive a 1 percent pay increase in 2014, their first raise since 2010. There are 10.5 million Americans who are unemployed, according to the U.S. Bureau of Labor Statistics.
Beef prices spiked 5.4 percent in February compared to the same month a year ago. That’s on top of a 22-percent increase in 2013. Fish and seafood prices were up 7.2 percent in February compared to a year ago.
“Meats are out of sight,” Price says. “Bacon is so expensive it’s enough to turn people into vegetarians.”
Bacon prices have risen 13 percent this year. Consumers also can expect fewer ribs on the barbecue this summer, when pork prices will hit $4 a pound, according to a forecast by Paragon Economics, an Iowa-based agricultural consultancy.
Lean hog futures are sizzling on Wall Street, up 52 percent. Investors are betting that pork prices will continue to rise because a swine virus that causes diarrhea is reducing the crop of piglets in 27 states, including such top producers as North Carolina.
In Delaware, pig farming is relatively small potatoes. There are only a few farms, says Daniel Shortridge, spokesman for the state Department of Agriculture.
“Delaware has not had any cases of porcine epidemic diarrhea virus,” he says. “There has been one case in Maryland, and our state veterinary staff are in close contact with theirs to keep on top of the situation.”
There’s also less beef on the hoof. That’s due, in part, to ranches shutting down during the great recession. The USDA’s current count stands at 88 million head of cattle, the lowest number in 63 years.
At Acme markets, that translates to a price tag of $7.99 per pound for Lancaster brand boneless New York strip steak for the week starting March 30. At ShopRite, certified Angus T-bone steaks tipped the scales at $10.99 per pound. SuperFresh served up Angus flank steak at $7.99 per pound, a special deal for shoppers who carry the grocer’s loyalty card.
California, the biggest food-producing state in the U.S., has been struggling with drought for nine years. 2013 was the driest year in state history, notes Andrew Harig, director of government relations for the Food Marketing Institute, a Washington, D.C.-area trade group for food retailers.
That’s not the only problem. In addition to sick pigs and an overabundance of California sunshine, other droughts and disease are challenging farmers on multiple fronts.
“Texas is also suffering through a significant drought, which is pushing up beef prices,” Harig wrote in a recent briefing to members. “Brazil had historically low rainfall in 2013, which is driving up the price of coffee, along with soybeans and sugar. Orange juice prices are shooting up due to ‘citrus greening’ that is decreasing harvests.”
Citrus greening is a bacteria that doesn’t harm humans but is always fatal to trees, causing fruit that is bitter and misshapen. Greening in Florida and drought in Brazil have squeezed two major citrus suppliers. With supply down, frozen orange juice futures are nearing a two-year high.
So, what’s a consumer to do?
Price and many shoppers began making adjustments years ago by clipping coupons. And the recently released Valassis Shopper Maketing Report indicates consumers are clipping more, with 40 percent reporting they have used more coupons in the past year. Millennials—born between the early 1980s and early 2000s—prefer digital coupons, with 92 percent downloading discounts to their loyalty cards.
“I always check to see which store is offering double coupons before I make my list,” Price says. “That makes my coupons go a lot further.”
While she remains true to the brands she relies on—“Clorox, Tide, Bounty paper towels,” she says—Price no longer feels loyalty to one grocery store.
“I go to the supermarket that has the lowest prices on the things I am buying that week,” she says. “That is the deciding factor.”
On occasion, Price will substitute a less expensive choice, such as sale-priced chicken for a more expensive protein. But she isn’t crossing any items off her list because of cost.
“This summer, if I want to treat myself to that strip steak, I will,” she says.
Over the long haul, the current increase in food prices is relatively modest, says Jeet Dutta, an economist at Moody’s Analytics in West Chester, Pa.
“It is not as bad at 2008 when there was a global food crisis,” he says.
Still, food prices impact every household. Like gasoline and heating fuel, consumers feel an immediate reaction when costs take a bigger bite out of their budgets.
“There is a psychological impact, especially when the labor market is slack, with lots of people who are still unemployed or underemployed,” Dutta says. “Consumers have always been more sensitive to food and energy prices than to increases in other goods and services.”
Easing grain prices are a positive sign, he says. That will help to reduce the cost of animal feed, as well as products such as breakfast cereal.
Still, Mother Nature is the ultimate decision maker in agriculture.
“If there is a bad stretch of weather in a grain growing area prices could spike again,” he says.
At the Delaware Local Food Exchange in Elsmere, shoppers are willing to pay a little more for foods that are humanely raised and produced by local farmers. For example, a dozen eggs from cage-free chickens costs $4.59, compared to $2.99 for a dozen of Eggland’s Best eggs at ShopRite produced by chickens that are not cage free.
Owner Karen Igou says the harsh winter has had a chilling effect on inventory. Hearty grains haven’t been available since January. Snowy pastures have reduced the supply of milk and meat from grass-fed cattle.
Environmentally friendly practices also help to keep prices in check. The food exchange offers donated plastic bags and encourages customers to bring their own bags. Shoppers who buy Sun and Earth cleaning supplies can bring back their bottles for refills. Currently, the exchange does more Sun and Earth refills than any other store in the U.S.
Igou is currently developing a class for customers on ways to integrate locally sourced foods into a family budget.
“People definitely care about price, even foodies,” she says. “You can eat healthy foods that are locally sourced for a lot less than you can buy takeout at Applebee’s.”
