By:  Doug Busselman, Executive Vice President

Who would have ever thought that the price we pay for food in the U.S. would have ever been more than a complaint from a grocery shopper wishing the family’s food budget would go a little farther?  Yet at various times during 2008 U.S. food prices were featured as part of the evening network news.

Not all who watched this interesting phenomenon play itself out were convinced that there wasn’t some news media manipulation being carried out in the effort to erode support for agricultural commodities being put to use as alternative fuels, http://www.fb.org/index.php?fuseaction=newsroom.newsfocus&year=2008&file=nr0430.html but regardless of who was playing who…the numbers highlighted in this very recent news blurb caught our eye and summarized the fact that food price increases did become a reality in 2008…

2008 FOOD PRICES INCREASE AT FASTEST RATE IN 30 YEARS:  U.S. retail food prices in 2008 increased at the fastest rate in nearly 30 years with many analysts saying the Consumer Price Index for food will have increased close to 7 percent in 2008, with a similar outcome in 2009.
 
It’s not just commodity prices that have pushed up the price of food. As global population expands, so does demand. China and India are among the rapidly developing nations that are responsible for increasing demand not just for food in general, but for meats and processed foods, specifically.
 
That would be well and good if supply were keeping up with demand, but world production increases have been steadily slowing as a result of less available land and slowing increases in annual productivity.
 
“Retail pricing of food appears to be predicated on the assumption that consumers dislike fluctuating prices on something as basic as food,” said Larry Jones, agricultural economist with the University Of Kentucky College Of Agriculture
 
As an example, he gave the fact that wholesale food prices increased approximately 8 percent in each of the past two years. Yet the retail price of food increased less than 5 percent on average each year.
 
"As commodity prices increased, retailers absorbed the increase, but now as commodity prices decline, retailers are not following suit by lowering prices at the retail level," he said.

http://www.cattlenetwork.com/Content.asp?ContentID=279773

It’s worth noting that despite the concerns that 2008 food prices may have grown at rates that were unique, as Larry Jones highlighted with his comments…

"Remember, too, the farm share of a hypothetical retail food dollar is about 20 cents, meaning the other 80 cents goes for such things as transportation, utilities, packaging, processing, advertising and profits. In other words, agricultural commodities represent a relatively small portion of the cost of food at the retail level."

Official data http://www.ers.usda.gov/Briefing/CPIFoodAndExpenditures/Data/table7.htm highlights the value that farmers and ranchers contribute to affordable prices.

We also can’t help but stress that our U.S. food supply is of the highest quality, with the greatest variety anywhere in the world.