4 Reasons Why Food Prices are Climbing; 12+ Money-saving Tips

By Ethel Tiersky

Mar 25, 2014

milkWhether you've noticed it yet or not, food prices, especially on perishable staples, have been climbing in 2014. Even worse news: they're likely to continue moving in that dire direction.  We'll tell you the reasons and the specific products affected.  Then we'll provide many tips for coping with this budget-breaking trend.

 

Here's the news story: The Bureau of Labor Statistics has announced that, in February, food prices rose 0.4%, the largest increase since September of 2011. Nevertheless, thanks to falling prices on gasoline, electricity, clothing and used cars, overall inflation has been small. In fact, the consumer price index went up only 1.1% in the past year.

 

However, predictions are that food costs will continue to rise in 2014, mainly due to these four occurrences:

  • drought adversely affecting farmers and ranchers
  • unusually cold and severe winter weather adversely affecting crops
  • a big increase in exports of milk to China and other Asian countries
  • a virus that has killed millions of pigs

A tough job market and sluggish economic growth have made the food industry reluctant to pass increasing costs onto consumers, but, as the year progresses, we're likely to see that happening anyway to a greater extent.

 

What foods are most likely to be affected by the conditions listed above?  Let's look at some food groups and what USA Today and the Bureau of Labor Statistics have to say about them:

 

Beef: The average retail cost of fresh beef rose 24¢ from January to February (to $5.28 per pound).  That's the highest price on record since 1987.  Why?  There's less beef available.  Midwest ranchers culled a lot of animals in 2011 and 2012 after droughts caused a shortage of animal feed.  Food scientist Karin Allen points out that when alfalfa and hay don't grow well, there's less feed for cattle. The rancher has to choose between 1) spending more on feed to fatten his cattle so they bring a good price or 2) feeding them less and having thinner cattle that bring in less money.  Either way, the rancher's profit is less, and consumers are likely to be charged more for the product.

 

Another factor affecting beef prices: many small ranchers simply went out of business after the 2007-2009 recession. The country now has 88 million head of cattle, the smallest herd since 1951. To read more about drought and its effect upon beef prices, go to "Drat that Drought!  It's Raising Food Prices."

 

Pork: The average price of a pound of sliced bacon reached $5.46 in February, up from $4.83 the year before. Retail pork prices went up 6.8% in the past year. In February, the average price of pork was $3.73. By the summer of 2014, pork prices are expected to reach $4 per pound because of a viral outbreak that has already killed 6 million pigs. However, Dr. Allen reassures us, "The virus does not pose any health risk to humans or other animals; it affects only pigs."

 

Poultry:  Higher prices on beef and pork have encouraged consumers to buy more poultry.  The result: according to the Agriculture Department, in 2013, poultry prices increased almost 5%.

 

Milk: In February, the average cost of a gallon of milk was $3.56, mainly due to a surge in exports to Asia.  The wholesale price has increased a whopping 36%.  Retail prices are expected to rise an additional 25-50¢ per gallon this year.

 

Produce: Two states have had catastrophic problems: very cold weather and drought in California and diseases that continue to damage citrus crops in Florida.  Orange prices went up 12% last month, and orange juice prices are at a 2-year high. Strawberries now cost 12% more than a year ago. If the drought continues, prices on other produce will also soar.  Did you know that (according to the website Zerohedge.com) California produces 1/3 of the nation's tomatoes; 2/3 of its carrots; 80-89% of its cauliflower, Romaine lettuce, spinach, lemons, peaches, and strawberries; and 90% or more of its celery, broccoli, artichokes, and plums?

 

Other news media have commented upon rising food prices even before the February, 2014 data was announced: 

 

Fish: The price of fish has also risen. The price of wild fish almost doubled between 1990-2012 because demand is high and supply is limited due to overfishing.  Farmed fish has also gone up but not as much.  The website the Star reported that, in January, 2014, the price of freshwater fish went up between 8%-12%.  Food scientist Dr. Joe Regenstein says, "My guess is that, as other items become more scarce, people will shift what they put in the center of their plates, and that increases the demand for fish and its price."

 

A Time magazine article published in December, 2013 quoted the following from the USDA:

 

Bread and cereal: Both wheat and wheat flour prices increased last month--wheat by 4.9% and wheat flour by 3.6%.  These increases support the expectation that bread and cereal prices will pick up in 20l4.

 

Chocolate: Time magazine says that, according to CNBC, the cost of raw materials for a chocolate bar rose 28% from January 2013 to October 2013.  Again, the prediction is that they'll keep climbing.  Why?  "Growing demand, unpredictable weather, and political volatility in the world's biggest cocoa-producing areas," says Time.

Coffee: According to the Columbus Dispatch website, drought in Brazil (the world's largest coffee producer), caused coffee futures to go up 57%.  In U.S. cities, the average price of a pound of coffee was $5 in February; it's expected to jump another 50¢ this year. 

 

Here's How To Cut Your Food Costs:

  • Cut waste by buying only enough perishables for a 3-5 day supply.
  • Throw out less food! Learn how to wrap and store food properly to extend shelf life by reading these articles:
  • Don't discard packaged goods just because their use-by date has passed.  Remember, that date is only about quality, not safety. If the product looks, smells, and tastes fine to you, then use it.  For more information on this topic, read "It Says 'Use By Tomorrow,' But You Don't Have To."
  • Use leftovers within a few days (maybe in a new dish) or freeze them promptly.
  • Find sales from the newspaper, online apps, or by shopping in more than one store.
  • Have a recipe-sharing party with friends, and have each person contribute his/her favorite delicious recipe made with inexpensive edibles. If guests bring the prepared dishes, everyone can sample them.
  • Revise your budget to allow for higher food prices, advises Dr. Karin Allen.
  • Give generic brands a try. According to Consumer Reports, store brands are cheaper, and most are just as good as (sometimes even better than) the well-known brands that do all the advertising.
  • Milk prices are going up! To keep your milk fresh longer, read "Milk Prices Climbing? Here Are Ways to Keep Your Costs Down" Also, consider trying powdered milk.
  • Don't let supermarket tactics trick you into spending more than you need to. Read the following article to turn yourself into a money-wise grocery shopper: "Supermarket Bargains You Can Find."
  • If you usually or always buy organic food, you can save a little by not buying organic packaged goods or organic seafood. Consumer Reports on Health points out that organic food almost always costs more. (The most extreme example the publication gave: conventional boneless, skinless chicken breasts sell for $2.75 per pound; the organic ones are priced at $6.67 per pound!) The newsletter says organic may be worth the extra cost to shoppers who are concerned about pesticides in conventional produce or antibiotics in conventional animal feed. However, the publication states that the only reason to choose organic packaged goods would be to avoid synthetic dyes, which have been linked to ADHD in children.  "But there's little evidence that conventional packaged goods are a health hazard to adults," the newsletter says.  Also, the article says, "Organic labels on fish and shellfish are meaningless because there are no government-approved organic standards for seafood." 
  • For Mother's Day, find something besides a box of fine chocolates to give as a gift.  Each piece in the box costs a small fortune these days!

 

 

Source(s):

 

www.usatoday.com "Rising food prices bite into household budgets" 

http://www.usatoday.com/story/money/business/2014/03/18/food-prices-rising/6557417/

 

www.usatoday.com  "Inflation remains tame despite jump in food costs"

http://www.usatoday.com/story/money/business/2014/03/18/consumer-price-index-february/6557445/

 

www.zerohedge.com  "15 Reasons Why Your Food Prices Are About to Start Soaring"

http://www.zerohedge.com/news/2014-02-17/15-reasons-why-your-food-prices-are-about-start-soaring

 

upi.com "Consumer prices rise slightly despite higher food prices"

http://www.upi.com/Business_News/2014/03/18/Consumer-prices-rise-slightly-despite-higher-food-prices/7131395153212/

 

business.time.com  "Bread, Beef, and Other Foods That Will Cost Way More Next Year"
http://business.time.com/2013/12/16/oh-god-no-bread-beef-and-other-foods-that-will-cost-way-more-next-year/

 

thestar.com  "Fish prices up due to bad weather"

http://www.thestar.com.my/News/Nation/2014/01/05/Fish-prices-up-due-to-bad-weather-Ikan-kembung-supply-in-Kedah-going-down-as-fishermen-are-forced-to/

 

Karin E. Allen, Ph.D., Utah State University, Dept. of Nutrition, Dietetics, and Food Sciences

 

Joe Regenstein, Ph.D., Cornell University, Dept. of Food Science

 

Consumer Reports on Health, "When to go organic," April 2014.

 

distpatch.com   "Breakfast foods are getting pricier"

http://www.dispatch.com/content/stories/business/2014/03/24/breakfast-foods-are-getting-pricier.html

 

ers.usda.gov "Outbreak of Porcine Epidemic Diarrhea Virus (PEDv) impacts forecast of 2014 U.S. port output

http://www.ers.usda.gov/data-products/chart-gallery/detail.aspx?chartId=43866 - .UzBssqLyJNQ

 

pork.org  "National Pork Board Statement on Porcine Epidemic Diarrhea Virus (PEDV)"

http://www.pork.org/News/3904/NationalPorkBoardStatementOnPEDV.aspx - .UzBuNKLyJNQ

 

 
 

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