‘What’s for dinner?’
‘Hot enough for you?’
Topics such as food and weather are sure conversation starters, especially this summer. This year’s drought conditions across the nation bring both topics to the forefront. The news regularly includes updates on the severe drought scorching most of the country. The story has rapidly widened to concern for food prices and availability.
Although many factors impact food prices, farmers only receive 16 cents of every food dollar consumers spend. Most of the food dollar can be traced to the cost of transporting, processing, manufacturing, marketing and packaging. Since oil prices dropped the past several weeks, some pricing relief has been felt on the energy side of the equation. Crops and livestock affected by this year’s drought aren’t yet in the consumer food chain, so the future of food prices is unknown.
“The lag between production and actual retail prices realization can be very, very long and a lot of things can happen to muddy the water,” says John Anderson, American Farm Bureau Federation (AFBF) Economist. “In general, drought is a difficult circumstance to deal with and it will reduce production of some of these items.”
Interestingly, retail food prices saw declines in the second quarter of 2012, despite the drought conditions. The AFBF quarterly Marketbasket survey monitors the price of 16 food items that represent a cross section of agricultural products. Missouri Farm Bureau members across the state shop local grocery stores to capture prices for these selected items. Statewide averages are submitted as part of the national average.
Both the AFBF and Missouri prices were slightly lower in the second quarter than during the first quarter of the year. This quarter’s total was $45.60 compared to $46.87 last quarter, down $1.27. Of the 16 items, nine cost less and seven more than the previous quarter. Unlike previous surveys, the only consistency was at the dairy counter where all items, eggs, milk and shredded cheddar cheese, were lower in price.
The meat counter found prices higher for ground chuck, chicken breasts and bacon, while prices dropped for sirloin tip roast and sliced deli ham. Red Delicious apples were up $0.03 per pound and russet potatoes were up $0.01 from the previous quarter, while prices dropped for both orange juice and salad mix. Grain items on our list were mixed as well. Toasted oat cereal fell in price as did a 20-ounce loaf of bread, while flour and vegetable oil increased.
Overall, Missouri prices were $0.98 higher than for the same items a year ago, but $5.31 less than the national average of $50.91. Of the 16 items, 13 cost less in the Show Me State, while three were higher.
All things considered, food prices were lower during April, May and June. The impact the extreme summer weather is yet to be determined as this scenario plays out on the farm and ultimately in the food chain.