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Retail Food Prices Up 4 Percent In Second Quarter

WASHINGTON, D.C., July 12, 2007 – Retail food prices at the supermarket increased slightly in the second quarter of 2007, according to the latest American Farm Bureau Federation Marketbasket Survey. The informal survey shows the total cost of 16 basic grocery items in the second quarter of 2007 was $42.95, up about 4 percent or $1.61 from the first quarter of 2007.

Of the 16 items surveyed, 14 increased, one decreased and one stayed the same in average price compared to the 2007 first-quarter survey. Compared to one year ago, the overall cost for the marketbasket items showed an increase of about 8 percent.

Regular whole milk showed the largest quarter-to-quarter price increase, up 34 cents to $3.46 per gallon. Sirloin tip roast increased 27 cents to $3.99 per pound; pork chops increased 22 cents to $3.63 per pound; ground chuck increased 20 cents per pound to $2.85.

Other items that increased in price: whole fryers, up 17 cents to $1.28 per pound; apples, up 15 cents to $1.45 per pound; vegetable oil and bread, both up 9 cents to $2.66 for a 32-oz. bottle and $1.58 for a 20-ounce loaf, respectively; mayonnaise, up 8 cents to $3.43 for a 32-oz. jar; and regular eggs, up 5 cents to $1.56 per dozen. Volunteer shoppers recorded nominal price increases for: cheddar cheese, up 3 cents to $3.72 per pound; flour, up 2 cents to $1.92 for a 5-pound bag; toasted oat cereal and corn oil, up 1 cent each to $2.86 for a 10-oz. box and $2.78 for a 32-oz. bottle, respectively.

Russet potatoes dropped 12 cents to $2.34 for a 5-pound bag. Bacon stayed the same at $3.44 per pound.

“Consumers have no doubt noticed their food dollar stretched a little tighter lately,” said AFBF Economist Jim Sartwelle. “As energy costs have increased, it has become more expensive to process, package, and transport food items for retail sale. In addition, soaring demand overseas for U.S. dairy and meat products has reduced quantities available at home, resulting in retail price increases at the grocery store. ”

As retail grocery prices have gradually increased, the share of the average food dollar that America’s farm and ranch families receive has dropped over time.

“In the mid-1970s, farmers received about one-third of consumer retail food expenditures on average. That figure has decreased steadily over time and is now just 22 percent, according to Agriculture Department statistics,” Sartwelle said.

Using that percentage across-the-board, the farmer’s share of this quarter’s $42.95 marketbasket total would be $9.45.

AFBF, the nation’s largest general farm organization, conducts its informal quarterly marketbasket survey as a tool to reflect retail food price trends. According to USDA statistics, Americans spend just under 10 percent of their disposable income on food annually, the lowest average of any country in the world. A total of 82 volunteer shoppers in 32 states participated in the latest survey, conducted during May.


Sidebar: Tracking Milk and Egg Trends

Although milk and eggs have been included in the AFBF quarterly marketbasket since the survey was initiated in 1989, volunteer shoppers recently began tracking retail prices for different types of these staples.

For the second quarter of 2007, shoppers found the average price for a half-gallon of regular whole milk to be $2.22. The average price for one gallon of regular whole milk was $3.46. Comparing per-quart prices, the retail price for whole milk sold in gallon containers was 28 percent lower compared to half-gallon containers, a typical volume discount long employed by retailers.

The average price for a half-gallon of rBST-free milk was $3.01, 36 percent higher than a half-gallon of regular milk. The average price for a half-gallon of organic milk was $3.65, 64 percent higher than a half-gallon of regular milk.

For the second quarter of 2007, the average price for one dozen regular eggs was $1.56. The average price for “cage-free” eggs was 85 percent higher at $2.89 per dozen.

“Consumer tastes shift with time, and America’s farmers and ranchers have shown a remarkable ability to adapt and produce different foods that meet those preferences,” said AFBF Economist Jim Sartwelle. “Some consumers prefer these specialty products and are willing to pay the higher prices needed to cover the increased costs associated with production practices such as ‘cage-free’ eggs and organic milk,” he said.

Regarding milk, “Opponents of rBST have had limited success at discouraging its use and getting processors and retailers to demand that farmers not use the product,” said Henry I. Miller, a physician and fellow at Stanford University’s Hoover Institution. “This trend is largely responsible for the much higher retail prices recorded for so-called ‘rBST-free’ milk,” he said. Miller also noted the retail premium for niche milks goes disproportionately to processors, rather than to farmers. He headed the Food and Drug Administration’s Office of Biotechnology from 1989 to 1993.


Contacts: Tracy Taylor Grondine
(202) 406-3642
Cyndie Sirekis
(202) 406-3649