USDA: Food prices to spike up to 4 pct. in 2011by Mark Steil, Minnesota Public Radio
Worthington, Minn. — Food prices are expected to rise as much as 4 percent this year, according to the U.S. Department of Agriculture. Meat prices will show some of the biggest gains.
The USDA's monthly forecast has a 1 percent increase over the January outlook. That would cost a family of four an extra $40 on their monthly food bill.
The overall meat sector could see a 5 percent increase in prices, with pork leading the way. Pork prices could jump as much as 6.5 percent this year. The forecast says the price of dairy products could increase 5.5 percent. Beef, cereals and bakery goods could end the year with a 4.5 percent rise.
That's a substantial jump, but still below what happened in 2008 when food prices increased 5.5 percent.
But the forces driving up prices are virtually the same, then as now.
Corn and wheat prices have nearly doubled since last summer. Diane Swonk, an economist with Mesirow Financial, says world demand for grain has been strong. At the same time though she says several nations, like Russia, Australia and Mexico, have had weather problems which reduced grain harvests.
"So you had both supply shortages at the same time demand was picking up outside of the U.S. and the combination of the two pushed up food prices," Swonk said.
Swonk said higher oil prices will add to the upward pressure on food prices, since gasoline and diesel fuel are needed for the tractors which plant the crop as well as the trucks that move the final product to the grocery store.
Former President Bill Clinton raised another issue in the food price debate Thursday: ethanol production. The U.S. ethanol industry uses more than a third of the nation's corn crop to make the fuel.
Speaking at a U.S. Department of Agriculture meeting in Washington, Clinton said making ethanol is a good thing but he said making too much of the product could short the rest of the world of food, and cause food riots.
Speaking at the same meeting though, USDA Secretary Tom Vilsack said there's plenty of corn for both food and fuel.
"We've seen extraordinary increases in productivity in the last 30 to 40 years," says Vilsack. "In talking to leaders of seed companies they are confident that corn can perhaps increase by as much as 100 bushels to an acre over time."
That would be a 60 percent gain over current yields. Vilsack also said the U.S. and other wealthy nations should work together to alleviate food problems in other parts of the world.
- All Things Considered, 02/24/2011, 5:56 p.m.