Food costs to rise

Marie Havenga • Jul 21, 2015 at 11:46 AM

Weather conditions — an early spring, a freeze and a summer drought — lined up for a perfect price storm, and experts predict we'll be swept up in coming months with increases in everything from milk and meat to bread and treats.

The U.S. Department of Agriculture says retail food prices have been flat so far in 2012, but cautions the impact of the drought will hit in 2013. The report states that inflation is expected to be strong for animal-based food products, but “the full extent of the drought and its effects on commodity prices are as yet unknown.”

But what local producers, grocers and farmers know for certain is that prices are going to soar.

Perfect storm

A fatal freeze after a warm spring wiped out many Michigan fruit crops, including 90 percent of the state's apple crop. The lack of rain during the growing season crunched corn, wheat and soybean production. The shortage led to expensive feed for livestock and a price increase in their byproducts – eggs, milk, poultry, beef and pork.

John Stanitzek, owner of Frank's Market at 1118 Washington Ave., said the recent 20 percent hike in beef and 15 percent spike in pork prices are the tip of the increase iceberg.

Stanitzek said recent hikes have been due to summer supply and demand and steep fuel prices. He said the drought's effects will touch down in 2013.

“Because of the drought it's costing farmers more money to feed cows,” Stanitzek said. “That's going to drive prices up. Unfortunately, we have to pass that on to the customers. We don't know how bad it's going to get. This winter and next spring is when we'll see the impact of what the weather has done.”

Bulk purchases

Stanitzek said many of his customers have been trying to beat the expected increases by buying “bundle packages” — bulk beef and pork quantities at discounted prices — and freezing them.

Sides of beef are also a savings option, but market rate is $1,100 to $1,200 for that chunk of cow.

“That's a lot of money to fork out all at once,” Stanitzek said. “The smaller meat bundles have been a little more popular. But it all depends on how much freezer space you have.”

Liquidating livestock

Chris Wolf, Michigan State University agriculture, food and resource economics professor, said because of the drought and high feed prices, many farmers are choosing to liquidate their livestock.

That likely means a trickle-down effect for consumers.

“These prices are historic on the grain side,” Wolf said. “We already, as a country, are at the lowest level beef herd in 50 years. Right now it's too expensive to buy food for dairy cows. The same thing is true with the pork and beef guys. I don't know how much supply will get cut back.”

Some dairy farmers are selling their herd and calling it quits – which could lead to an uptick in milk prices.

Price fluctuations

Corn and wheat prices have escalated more than 50 percent because of shortage due to the drought. Corn was $5 a bushel before the parched summer. It's pushing $8 a bushel now.

“Had it been a really good year, it wouldn't be nearly the issue that it is,” Wolf said. “If you think about corn and wheat, it's in pretty much everything.”

That means everything from pasta to soda pop could be fizzing up in price.

“If it's a temporary blip, the manufacturers and retailers may decide to eat the difference so they don't lose too much demand,” Wolf said. “We just don't know at this point what's going to happen. There are a lot of variables that are moving here.”

Kristin Deiulius has seen prices moving. Deiulius, manager at DeLass Garden Market, 813 W. Savidge St. in Spring Lake, said prices are already on the rise for eggs and apples.

Organic eggs have cracked the $6 a dozen mark, up from $4.75, and honey crisp apples spiked 25 percent from last season. Other apple varieties have doubled in price.

“Our apples are ridiculous this year,” Deiulius said. “Last year honey crisps were $4 a quart and you got about six apples. This year we are selling them at $5 a quart and that includes five apples. We don't see as many apples going out the door as quickly.”

The spring freeze had other effects – few cherries this year and pricey peaches, plums and pears.

Alex Rogalla, director of operations for the Spring Lake and Fruitport Orchard Markets, said he's seeing his share of produce problems. Orchard Market typically stocks “bins and bins” of honey crisp apples each autumn. Not so this year.

“Some of those real staple local crop fruits people are used to getting, you just don't have the supply for them,” Rogalla said.

Dairy and meat prices are also on the rise.

“The biggest effect is with the corn prices rising,” Rogalla said. “It's truly affecting many, many areas inside the market. Eggs are increasing dramatically, the fresh meats, we've seen beef continue to rise. Pork and chicken I think aren't too far behind. The forecasts don't look good for future prices.”

Rogalla said everything is likely on the upswing.

“All milk and milk byproducts will be seeing an increase in the next few months,” Rogalla said. “That means milk, ice cream, sour cream... It all goes back to the high cost of feeding the animals. It's costing more to take care of the cows so the farmers charge more. It hits the consumer in the end. You couple the increases with unemployment and household income going down and it's like a triple-edged sword.”

Stretching dollars

Rogalla said he's noticed a lot of shoppers “trading down” in their meat choices. Former steak and roast buyers are opting for hamburger, hot dogs and lunchmeat.

“And coupon use is at an all-time high,” Rogalla said. “People are trying to find ways to stretch that dollar.”

Rogalla said expiration dates aren't always a hard and fast rule. Many items are good well beyond the stamped date.

“Certainly use caution and good judgment,” Rogalla said. “But many times milk will last up to a week past the date. There was a day and time when there weren't dates on a lot of things. They're on there for the protection of the consumer, but there are many times when a dated product is fine to consume.”

Rogalla suggests shopping smarter and planning meals around what's on sale. When you find a great deal, stock up.

“We're going to have droughts, hurricanes, rains,” Rogalla said. “People don't need to panic. It's just a matter of stretching dollars and planning meals better.”

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