Food prices shoot up in 1st 5 months of ’07
Posted on Friday, July 13, 2007
Food prices for the first five months of 2007 rose at a faster rate than in any full year since 1990, putting the squeeze on many lower- and fixed-income Arkansans.
The price of food rose at a seasonally adjusted annual rate of 6. 2 percent in the first five months of this year, after rising 2. 1 percent in 2006, as measured by the U. S. Department of Labor’s Consumer Price Index. The increase this year was well ahead of the figure for all items other than food and energy, which went up at an annual rate of 2. 1 percent from January to May.
Ephraim Leibtag, an economist with the U. S. Department of Agriculture’s Economic Research Service, said shoppers are seeing grocery prices rise faster than they have since 1990. The price of eggs has soared nearly 30 percent in the past year, and white bread is up more than 8 percent.
The American Farm Bureau Federation also has tracked the higher prices. It said Thursday that it conducted an informal survey that showed retail food prices in the second quarter of 2007 rose 4 percent above their first-quarter level and were up 8 percent from a year earlier.
The high cost of energy is the biggest culprit, analysts agree. The price of crude oil has tripled over the past five years. Energy is a prime factor in the total operating costs for farms, rising 47 percent from 2002 to 2006, said Bobby Coats, an agricultural economist with the University of Arkansas Cooperative Extension Service.
Leibtag said food prices should grow more slowly in the second half of the year, with the total increase in 2007 expected to be 3. 5 percent to 4 percent. He said that rate of price increases will continue into the middle of next year.
Wages haven’t kept up, with average hourly earnings up 1. 6 percent since January, according to the Bureau of Labor Sta- tistics. And with the high price of gasoline — hovering around $ 3 a gallon nationally — taking larger bites out of many paychecks, grocery budgets are getting tighter.
Felicia Thomas, 36, a state probation officer with four sons who was shopping recently at a Family Dollar store in Little Rock, said “everything is going up.” Rises include key items like milk, which is up 8 percent in the past year, according to the Labor Department index. Thomas said she’s cutting back on name-brand items in favor of off-brand alternatives but won’t cut back on food.
Gesturing to her children, she said, “When it comes to their well-being and food, I choose the food first and get the gas later.”
Meat prices have rung up big increases, with the price of beef up 5. 1 percent from January to May.
Poultry prices rose 4. 3 percent over the same period, as measured by the index.
“That’s about the highest thing in the store, and that’s what most people need,” Manuel Martinez, 27, a security guard at a Harvest Foods store in Little Rock, said of the cost of meat. He said he lives alone and spends about $ 250 a month on groceries.
“Before, I could load up for a month and a half on that,” he said.
Most vulnerable are the poor. An estimated 424, 576 Arkansans, 15. 6 percent of the state population, lived in poverty in 2004, according to the U. S. Census Bureau. When money is tight, food is usually the first expense to be cut, said Deb Alich, executive director of the Arkansas Hunger Relief Alliance.
And in the summer, when children are out of school and away from government-funded school lunch and breakfast programs, budgets can tighten even more.
Dorothy Miller, 56, of Jacksonville, says she is having trouble paying for both food and gasoline. She lives on her Social Security checks, and “by the time I pay all my bills, I don’t have any money” for food.
To stretch her budget, Miller gets free food from Fishnet Missions, a community pantry in Jacksonville.
She’s not alone.
In the first three months of 2007, 20 percent more households sought food from the more than 400 soup kitchens, free pantries and other agencies of the Arkansas Foodbank Network than did a year before, said Phyllis Haynes, the food bank’s executive director.
Fishnet Missions founder Dewey Sims said the number of new families coming in for weekly allotments of canned vegetables, bread and other foodstuffs has jumped in recent months from 20 a week to about 35 a week.
The pantry serves about 4, 200 families a month, Sims said, and hundreds more at its 70 satellite locations, as well as serving lunches for children in the summer.
“We can’t give them everything they need, but we can make a difference,” he said.
Florence Beauford, 56, said she has received free food from Fishnet Missions for the past year to stretch her weekly grocery budget of $ 75. She lives on a fixed income, she said, and cares for a disabled adult son.
“Truly, if it weren’t for them helping out, I would not be able to make it through on what we get,” she said.
In Conway, eight or 10 new families a week have been going to the Zion Community Outreach program in the past six or eight months, said the Rev. Warren Stroud, who has run the free pantry for more than two years. The program is housed in a trailer behind Zion Baptist Church near Lake Conway.
Stroud said the increase in clients has been straining his budget. For the past four or five months, he’s needed to dip into regular church funds to cover the pantry’s expenses, he said. Much of his stock comes free from the Arkansas Foodbank Network, and he pays 18 cents a pound for transport — a good deal, he said, “but if you don’t have 18 cents, it might as well be $ 20 a pound.”
Farmers also have experienced budget-straining. Coats, the Extension Service agricultural economist, said a 222, 800-acre rice-soybean-wheat farm that consumed $ 37, 000 of fuel a year in 2002 requires more than $ 140, 000 a year in energy now.
Energy has an indirect affect on food prices, as well. Coats said the price of corn — a key animal feed — is 53 percent higher today than it was in August 2006. Leibtag, the Agriculture Department economist, said the main reason for the dramatic upswing is increased demand since so much corn is now used to make ethanol, which is blended with gasoline to make alternative fuels.
Bad weather earlier this year that disrupted fruit and vegetable supplies, and increased global demand for food have also had an impact, Leibtag said.
Rising energy costs also affect the transportation industry, which plays a key role for distributors and retail stores.
Kim Eskew, executive vice president of Springdale-based Harps Food Stores, said utility costs have been rising for several years but are only recently showing up as price increases at Harps and other retailers.
Prices “tend to lag a little bit behind the cost increases sometimes,” he said, as manufacturers, distributors and retailers try to ride out periods of higher costs without raising prices.
At some point, Eskew said, retailers must pass their costs on to consumers.
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