These days it's better to be an egg farmer than to work at the Wall Street firm Bear, Stearns. That's the only conclusion you can draw after reading story after story about rising food prices. But what about the rest of us, the serious eaters who are neither egg farmers nor investment bankers?
Here, according to Andrew Martin and Michael M. Grynbaum of the New York Times, are the cold, hard facts:
Government figures released (a week ago) Friday showed that grocery costs had jumped 5.1 percent in 12 months, the latest in a string of increases. In fact, the nation is undergoing its worst grocery inflation since the early 1990s.
With a few exceptions, nearly every grocery category measured by the Labor Department, which compiles the official inflation numbers, has increased in the last year. Milk is up 17 percent, as are dried beans, peas and lentils. Cheese is up 15 percent, rice and pasta 13 percent, and bread 12 percent.
No food product has gone up as much as eggs, jumping 25 percent since February 2007 and 62 percent in the last two years.
Why is this happening and what does it all mean?
Economists say higher food costs are being caused by rising energy prices, a weak dollar that encourages exports of American crops and food products, and soaring prices for farm commodities like milk, corn and wheat.
The sharp increase in egg prices was caused by a confluence of factors, among them a contraction of the industry because of the slump in 2005 and 2006 and a major increase in feed costs. About three-quarters of feed for laying hens is corn, and the price of corn has been driven up in part by government mandates for production of ethanol.
The near-term prognosis for food prices is not good:
Ephraim Leibtag, who tracks food prices for the Department of Agriculture’s Economic Research Service, said that with farm prices remaining near record levels, he was not optimistic that food prices would moderate in 2008. Instead, he predicted that food inflation would be at least as high as in 2007, perhaps higher.
Mr. Leibtag predicted that cereal and baking products would continue to increase because of steep prices for wheat; in fact, the price of cereal and bakery products increased 1.8 percent in February, the largest monthly gain since January 1975.
Restaurants are being forced to raise prices, cut portions, and substitute less expensive ingredients whenever possible. My guess is we're going to be seeing a lot more hangar steak and less porterhouse, shell, and rib cuts. The Wall Street Journal reported about this recently in a story titled Cutback Cuisine.
We're also going to be paying more for food we buy in grocery stores and farmers' markets for awhile.
I hope that consumers feeling the pinch will not turn away from organics and sustainably raised meat and produce because of rising food prices. On so many levels the sustainable food movement is too important to too many people (farmers, investment bankers, and the rest of us) for that to happen. This movement has the potential to eventually change the way everyone eats, and I would hate to see its progress impeded by the overall state of the economy.
So, are you feeling the pinch? Are rising food prices affecting what you eat?
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