just another laissez-faire bubble from the results of under taxing and
under regulating unproductive wealth, Food Costs Rising Fastest in 17
Years Squeezing the Poor
http://biz.yahoo.com/ap/080414/inflation_squeeze.html
Food Costs Rising Fastest in 17 Years
Monday April 14, 4:10 pm ET
By Ellen Simon, AP Business Writer
Food Costs Rising at Fast Clip, Squeezing Poor, Forcing Food Vendors
to Explain Higher Prices
NEW YORK (AP) -- Steve Tarpin can bake a graham cracker crust in his
sleep, but explaining why the price for his Key lime pies went from
$20 to $25 required mastering a thornier topic: global economics.
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He recently wrote a letter to his customers and posted it near the
cash register listing the factors -- dairy prices driven higher by
conglomerates buying up milk supplies, heat waves in Europe and
California, demand from emerging markets and the weak dollar.
The owner of Steve's Authentic Key Lime Pies in Brooklyn said he
didn't want customers thinking he was "jacking up prices because I
have a unique product."
"I have to justify it," he said.
The U.S. is wrestling with the worst food inflation in 17 years, and
analysts expect new data due on Wednesday to show it's getting worse.
That's putting the squeeze on poor families and forcing bakeries,
bagel shops and delis to explain price increases to their customers.
U.S. food prices rose 4 percent in 2007, compared with an average 2.5
percent annual rise for the last 15 years, according to the U.S.
Department of Agriculture. And the agency says 2008 could be worse,
with a rise of as much as 4.5 percent.
Higher prices for food and energy are again expected to play a leading
role in pu****ng the government's consumer price index higher for
March.
Analysts are forecasting that Wednesday's Department of Labor re****t
will show the Consumer Price Index rose at a 4 percent annual rate in
the first three months of the year, up from last year's overall rise
of 2.8 percent.
For the U.S. poor, any increase in food costs sets up an either-or
equation: Give something up to pay for food.
"I was talking to people who make $9 an hour, talking about how they
might save $5 a week," said Kathleen DiChiara, president and CEO of
the Community FoodBank of New Jersey. "They really felt they couldn't.
That was before. Now, they have to."
For some, that means adding an extra cup of water to their soup,
watering down their milk, or giving their children soda because it's
cheaper than milk, DiChiara said.
U.S. households still spend a smaller chunk of their expenses for
foods than in any other country -- 7.2 percent in 2006, according to
the USDA. By contrast, the figure was 22 percent in Poland and more
than 40 percent in Egypt and Vietnam.
In Bangladesh, economists estimate 30 million of the country's 150
million people could be going hungry. Haiti's prime minister was
ousted over the weekend following food riots there.
Still, the higher U.S. prices seem eye-popping after years of low
inflation. Eggs cost 25 percent more in February than they did a year
ago, according to the USDA. Milk and other dairy products jumped 13
percent, chicken and other poultry nearly 7 percent.
USDA economist Ephraim Leibtag explained the jumps in a recent
presentation to the Food Marketing Institute, starting with the
factors everyone knows about: sharply higher commodity costs for
wheat, corn, soybeans and milk, plus higher energy and trans****tation
costs.
The other reasons are more complex. Rapid economic growth in China and
India has increased demand for meat there, and ex****ts of U.S.
products, such as corn, have set records as the weak dollar has made
them cheaper. That's lowered the supply of corn available for sale in
the U.S., raising prices here. Ethanol production has also diverted
corn from dinner tables and into fuel tanks.
Soybean prices have gone up as farmers switched more of their acreage
to corn. Drought in Australia has even affected the price of bread, as
it led to tighter global wheat supplies.
The jump has left people in the food business to do their own
explaining. Twin Cafe Caterers in lower Manhattan posted a letter on
its deli cooler: "Due to the huge increase of the gas, the
electricity, the water and all the other utilities, we had to raise
the prices a little bit." It went on to say that all its food prices
have risen, too.
Wonder Bagels, in Jersey City, N.J., posted a letter from its wheat
supplier, A. Oliveri & Sons, saying the recent situation was
unprecedented.
"The major mills across the country are using words like 'rationing'
and 'shortages' if things continue," it said. "We will sweat out the
summer together, hoping there will be some flour left to purchase at
any price."
The letter called for an immediate halt to ex****ts and a change in
farm policy, "stop paying farmers NOT to grow crops." A new farm bill,
stalled in Congress, would expand farm subsidies if it p*****,
however.
For some Americans, the resulting increases might be barely
perceptible. The Cheesecake Factory raised prices by 1.5 percent at
the end of February, Applebee's by 3 percent.
But for the poorest U.S. families, the higher costs may mean going
hungry. A family of four is eligible for a maximum $542 a month in
food stamps, which never lasted the whole month before, Food Bank of
New Jersey's DiChiara said.
"Now food stamps go fewer and fewer days of the month," she said.
The Food Bank recently got a letter of its own from a key vendor. Its
grim message: Sorry, but the prices they charge the Food Bank would be
increasing 20 percent, due to food inflation.
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