Food costs to rise

The food forecast isn't final, but it appears your cash could be gashed buying groceries this winter.
Marie Havenga
Oct 6, 2012

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.”

 

Comments

Tri-cities realist

But wait, I thought the economy was "fine" now that unemployment is supposedly below 8%. How could this bad economic news be allowed to be published, I smell a vast right wing conspiracy. Or are people finally waking up to reality? One can only "hope".

Vladtheimp

I am certain the drought and other naturally occurring weather conditions have had a large impact on prices, but the article seems to ignore for the most part "man-caused disasters" - a phrase used by Janet Napolitano, head of Homeland Security, to avoid having to say "terrorist attacks." But, But, Vlad, you say, what does that have to do with the rising price of food? Well, maybe it would be more correct to say "politician/radical environmentalist man-caused disaster." A large part of the rise in costs is due to the rising cost of gas (doubled since President Obama took office). Since the President has halved the number of permits to drill for oil on public lands, has virtually shut down deep water oil drilling in the Gulf, and has imposed costly and time consuming regulations on the energy sector, is it any wonder that the price of oil is rising, not to mention our "friends" in the Middle East and Venezuela? But Vlad, you say, that has nothing to do with the shortage of corn. Au contraire, grasshopper, on marching orders from radical environmentalists, we are now using 30% of our corn crop to feed ethanol, not cows. Farmers, even with their subsidies, can't compete with the size and subsidies of Archer-Daniels Midland. Oh well, it should be some consolation that when you can't start your small engine equipment this fall/winter, it will be due to that corn which won't be used to feed cattle. And yeah - even Stevie Wonder can see the comments to come "learning" me that the drought / spring freeze were caused by global warming, as was the Lions loss last Sunday.

Lanivan

Vlad and TCR - Jumping on the propaganda machine in the industry of falsehoods, once again, I see. Domestic oil and natural gas production has increased every year under Obama. Actually, it has quadrupled in the last 4 years - 2011 was am 8-year high point. Crude oil production in North Dakota alone has more than tripled, from 190,000 barrels/DAY in 2008 to nearly 675,000 in July 2012 barrels/DAY. All forms of US energy production have gone up under Obama - oil, natural gas, solar, wind. Oil companies have shifted production from oil drilling on public land to fracking for natural gas on private land. Deep water oil production on public land (Gulf of Mexico is considered "US public land") did go down after the Deepwater Horizon spill - you remember that, right - the biggest and costliest oil spill in the Gulf? It is not only appropriate but essential regulations be put in place after that enormous oil spill - but you'll be happy to know that "the virtual shut-down of deep water oil drilling in the gulf" is over and that more permits are being approved than before the spill - apparently those "costly and time consuming regulations" are more of an issue to you than the oil companies!! High oil and gas prices do contribute to higher prices across the board - but most of us realize the president doesn't have control of global oil prices - the oil companies do. Funny how robotic and zombie-like you are in immediately blaming Obama for everything - you give him so much power for the negatives, but belittle and demean him on the positives. Funny you stick up for the oil companies - who stick it to you with high gas prices, but can't say a single good thing for Obama, who governs for your best interests. that's the Republican way these day - Lie, Deny, Switch & Doublespeak.

Vladtheimp

You rarely disappoint, Lanivan. When Obama's policies are correctly criticized, defend the indefensible, generally by changing the subject, and pulling out false democrat talking points. I limited my comment to permits for oil on public lands – you ignore that Obama has crippled the use of public lands for oil, and bring up private lands, which Obama has nothing to do with but is nonetheless trying to limit based on spurious questions about fracking. I note Obama has crippled deep water Gulf oil production – you bring up an oil spill that was so over hyped by the administration and the media that it sounded like the tsunami, yet its environmental impacts have been virtually non-existent. You follow up with factoids and other gibberish from Media Matters and who knows what other questionable sources, and come up with the gully whomper that all forms of energy production have gone up under Obama (tell that to the United Mine Workers (coal) which you forgot to mention as a form of energy, who have been decimated by Obama's war on coal); you then cite oil and natural gas, which have risen in spite of Obama's policy attempts to shut them down on public lands; then you cite solar and wind, which have gone from nothing to next to nothing and only because of taxpayer subsidies to Obama bundlers and contributors. How stupid do you think the readers of the Grand Haven Tribune are? (Pretty stupid, from your repeating vomitus from discredited left wing political and environmental sources). You then try to cover your back by saying the President has no control over global oil prices (nobody said he did, although the left apparently thought George Bush was more powerful than Obama); what I am saying is that we would be on well on our way to domestic self sufficiency if the democrats had not blocked every fossil energy production initiative from ANWAR to the Gulf, to offshore, to public lands, to Keystone over several decades. The cat seems to have gotten your tongue about ethanol – did you miss that part of my comment? You know what? I don't care. So-called green policies are hurting the poor the most, from the cost of gasoline and home heating oil to the cost of putting food on the plate of their families. Obama and the democrats are the ones imposing this most regressive form of taxation on them. If they want to continue to suffer at the hands of their “protectors” and good suburban enablers like some folks I know, let them - I just won't be joining the Amen Chorus and drinking the Cool-Aid.

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