Healthy soil and sustainable growing

["Tradingpost" <tradingpost@lobo.net>]

Sooo.. I'd rather be a seller at the market than a buyer at the store. Hmmmm? 
At this rate, my $4 lb tomatoes will soon be cheaper than the baseballs they 
haul in from Florida and Mexico.

Surging costs of groceries hit home
Bread, eggs, milk prices up sharply
Email|Print| Text size – + By Robert Gavin
Globe Staff / March 9, 2008
http://www.boston.com/business/personalfinance/articles/2008/03/09/surging_costs_of_groceries_hit_home/

American families, already pinched by soaring energy costs, are taking 
another big hit to household budgets as food prices increase at the fastest 
rate since 1990.

After nearly two decades of low food inflation, prices for staples such as 
bread, milk, eggs, and flour are rising sharply, surging in the past year at 
double-digit rates, according to the Labor Department. Milk prices, for 
example, increased 26 percent over the year. Egg prices jumped 40 percent.

Escalating food costs could present a greater problem than soaring oil prices 
for the national economy because the average household spends three times as 
much for food as for gasoline. Food accounts for about 13 percent of 
household spending compared with about 4 percent for gas.

Rising food prices can be particularly corrosive to consumer confidence 
because people are so frequently exposed to the cost increases. "It's the 
biggest risk we face economically, and it might be the thing that does us 
in," said Rich Yamarone, director of economic research at Argus Research 
Corp. in New York. "There's nothing really worse than having a job, making 
money, and forking most of it over just so you can have the same amount of 
food. You're running in place, and it really weighs on you."

As with energy, higher food costs cut into discretionary income that buys 
everything from cars to computers to movie tickets and drives the 
consumer-based US economy. Falling home values and a faltering stock market 
have battered consumer confidence, spurring a retrenchment in spending that 
is contributing to recent job losses and pulling the economy toward recession.

Many analysts expect consumers to keep paying more for food. Wholesale food 
prices, an indicator of where supermarket prices are headed, rose last month 
at the fastest rate since 2003, with egg prices jumping 60 percent from a 
year ago, pasta products 30 percent, and fruits and vegetables 20 percent, 
according to the Labor Department.

"No retailer can absorb cost increases indefinitely," said Laura Sen, 
president of BJ's Wholesale Club, the Natick chain of discount warehouse 
stores. "Given what we are seeing, all retail channels need to raise prices, 
and from our observations, are doing so."

Amy Brnger, 43, of Portsmouth, N.H., just needs to look at her grocery 
receipts. For a long time, feeding her family of three used to cost around 
$125 a week. Suddenly this winter, her bill leaped to about $200.

Quickly, Brnger, a school counselor and mother of a 9-year-old daughter, 
looked for ways to save. She buys fewer organic products, which can cost 
twice as much as conventional goods. Instead of buying chicken breasts, she 
buys whole chickens and cuts them into parts, saving about $2 a pound. She 
buys dried beans, instead of canned. And she is baking her own bread.

"I can't believe a loaf of bread is like $4," she said. "I'm just being a lot 
more conscious of buying things."

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more stories like this

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Several factors contribute to higher food prices, analysts say, but none more 
than record prices for oil, which last week closed above $105 a barrel. Oil 
is not only driving up production and transportation costs, but also adding 
to demand for corn and soybeans, used to make alternative fuels such as 
ethanol and biodiesel.

As a result, corn prices have more than doubled in commodity markets over two 
years, and soybeans nearly tripled, according to DTN, a commodities analysis 
firm in Omaha. Meanwhile, with poor harvests in major wheat-producing 
regions, wheat prices have more than tripled.

These crops have a profound impact on food prices because they form 
foundations for many products, including oils, sweeteners, and flour. Corn, 
for example, is a key ingredient in livestock feed. When the price of corn 
rises, so does the price of feed, and ultimately, so do the prices of meat, 
poultry, and eggs.

Darin Newsom, senior analyst at DTN, said the same dynamics pushing oil 
prices to new highs are at work in agricultural commodities. They start with 
strong global demand, growing as living standards improve in developing 
nations such as China and India and food consumption increases.

The weak US dollar, at or near historic lows against the euro and other 
currencies, adds more pressure. Oil and other commodities trade in dollars, 
so when the dollar is worth less, producers demand higher prices to make up 
for the loss in value. This pressure raises inflation fears, which in turn 
make commodities attractive to investors, who view them as holding value 
during inflationary periods. As investors buy, demand grows and commodity 
prices go even higher.

This combination of a weak dollar, soaring energy prices, and global demand 
recalls the 1970s, when retail food prices rose an average of nearly 9 
percent a year, said Bill Lapp, president of Advanced Economic Solutions, an 
Omaha research firm. Over the past year, Lapp said, food prices rose nearly 5 
percent, more than double the average rate of the previous 10 years. Prices 
will rise even faster the next five years, he forecasts, increasing at an 
annual rate of 7.5 percent.

"Much as we saw in the '70s," he said, "these sharp increases are going to be 
sustained."

The US Department of Agriculture forecasts overall food prices this year will 
rise about 4 percent, about half Lapp's forecast, but still faster than 
recent years.

Anthony Conti, executive vice president at Agar Supply Inc., a Taunton food 
distributor, said there is little doubt consumers will continue to pay more. 
"Every day we get notices from manufacturers that prices are going up," he 
said.

Agar sells to supermarkets, restaurants, and other outlets, and it is paying 
some of the highest prices ever, Conti said. Cheese prices have doubled from 
a year ago, and beef prices have risen more than 50 percent. On top of these 
costs, Agar is paying about $3.70 a gallon for diesel - more than $1 above 
last year's prices - for a truck fleet that travels about 4 million miles per 
year.

It all adds up to even higher prices in grocery aisles and restaurants as 
costs get passed down the supply chain. Barb Phillips of Medway, for example, 
said the price on a case of formula for her 7-month-old son recently jumped 
from $32 to $38. Phillips, a loan processor who earns less than $40,000 a 
year, said she has stopped buying snacks and fresh produce for herself 
because prices are too high and stretches her meat purchases by making soups 
and stews.

"Everything just keeps going up," said Phillips, 41. "It's all really grim."