Factors Affecting Food Prices Discussed

More than just commodity prices causing increase in food prices.

Published on: Apr 8, 2011

Experts are saying farmers and ethanol producers aren't responsible for recent increases in the cost of groceries. Purdue University agriculture economist Corinne Alexander says food inflation will average between 4% and 4.5% this year. Normal food inflation is about 2.5%. But, Iowa State University agriculture economist Chad Hart says the cost of our food is related to the cost of corn, soybeans and wheat and cattle but also the cost of oil, gas, diesel and unrest in other parts of the world.

Hart points out we are entering that world where folks are getting squeezed and they want an explanation for it. Rick Tolman, chief executive of the National Corn Growers Association, says his group has already begun to hear complaints aimed at farmers that are similar to those expressed in 2006 and 2007. Tolman says the criticism is unfounded.

Scott Faber, a spokesman for the Grocery Manufacturers Association, says some products are much more sensitive to increases in corn prices, including meat, poultry, eggs and dairy products. For some products, he says you see it fairly quickly and see an equally quick decrease and for other products the lag time is longer. In 2008 farmers received an average of 11.6 cents per dollar. The rest of the food dollar goes to processing, packaging, transportation, retail trade and food service.