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Staple Food Prices Trend Down for 5th Straight Quarter

WASHINGTON, D.C., January 5, 2010 – Retail food prices at the supermarket decreased for the fifth consecutive quarter and are significantly lower than one year ago, according to the latest American Farm Bureau Federation Marketbasket Survey.

The informal survey shows the total cost of 16 food items that can be used to prepare a meal was $42.90, down $3.13 from the third quarter of 2009 and $7.31 lower or about 15 percent less compared to one year ago. Of the 16 items surveyed, 11 decreased, four increased and one remained the same in average price compared to the prior quarter.

Russet potatoes, shredded cheddar cheese, deli ham, flour, bacon and boneless chicken breasts declined the most in dollar value from quarter-to-quarter. Potatoes dropped 47 cents for a 5-pound bag to $2.18; shredded cheddar cheese dropped 43 cents per pound to $3.65; sliced deli ham dropped 40 cents per pound to $4.35; flour dropped 38 cents to $2.10 for a 5-pound bag; bacon dropped 37 cents to $3.00 per pound; and boneless chicken breasts dropped 37 cents per pound to $2.71.

“The 2009 U.S. potato harvest set a yield record for the sixth consecutive year. As a result, processors paid lower wholesale prices to potato farmers, which in turn benefitted consumers as grocers dropped retail prices,” said AFBF Economist Stefphanie Gambrell. “Sluggish consumer demand, particularly for meats and dairy products, also played a role in the lower retail grocery prices reported this quarter.”

Other items that decreased in price were sirloin tip roast, down 27 cents to $3.60 per pound; vegetable oil, down 21 cents to $2.51 for a 32-oz. bottle; apples, down 21 cents to $1.25 per pound; bagged salad, down 20 cents to $2.57 for a 1-pound bag; and orange juice, down 20 cents to $2.93 for a half-gallon.

Compared to a year ago, potatoes decreased 35 percent; shredded cheddar cheese decreased 26 percent; chicken breasts decreased 22 percent; vegetable oil decreased 21 percent; and whole milk decreased 20 percent according to AFBF’s survey.

“Again this quarter and compared to one year ago, Farm Bureau volunteer shoppers found that the foods that declined the most in average retail price are among the least-processed items in our marketbasket,” Gambrell said.

Four foods went up slightly in price compared to the prior quarter: milk, up 17 cents to $3.04 per gallon; eggs, up 11 cents to $1.55 per dozen; white bread, up 6 cents to $1.82 for a 20-oz. loaf; and ground chuck, up 4 cents to $2.69 per pound. Toasted oat cereal remained the same in price compared to the prior quarter, at $2.95 for a 9-oz. box.

Compared to one year ago, none of the items in the survey increased in retail price.

The year-to-year direction of the marketbasket survey tracks with the federal government’s Consumer Price Index (www.bls.gov/cpi) report for food at home, although Farm Bureau’s reports a sharper decline. As retail grocery prices have increased gradually over time, the share of the average food dollar that America’s farm and ranch families receive has dropped.

“Beginning in the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average. Since then, that figure has decreased steadily and now stands at just 19 percent, according to Agriculture Department statistics,” Gambrell said.

Using the “food at home and away from home” percentage across-the-board, the farmer’s share of this quarter’s $42.90 marketbasket would be $8.15.

Further, according to USDA, the average price farmers received for their products from November to December, as well as compared to a year ago, remained flat or showed negligible changes.

AFBF, the nation’s largest general farm organization, has been conducting the informal quarterly marketbasket survey of retail food price trends since 1989. The mix of foods in the marketbasket was updated during the first quarter of 2008.

According to USDA, Americans spend just under 10 percent of their disposable annual income on food, the lowest average of any country in the world. A total of 99 shoppers in 32 states participated in the latest survey, conducted in early November.

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Sidebar: Tracking Milk and Egg Trends

For the fourth quarter of 2009, shoppers reported the average price for a half-gallon of regular whole milk was $1.99, up 10 cents from the prior quarter. The average price for one gallon of regular whole milk was $3.04, up 17 cents. Comparing per-quart prices, the retail price for whole milk sold in gallon containers was about 25 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 $3.08, down 24 cents from the last quarter and about 55 percent higher than the reported retail price for a half-gallon of regular milk ($1.99).

The average price for a half-gallon of organic milk was $3.57, down 20 cents compared to the third quarter – about 80 percent higher than the reported retail price for a half-gallon of regular milk ($1.99).

Compared to a year ago (fourth quarter of 2008), the retail price for regular milk in gallon containers decreased by 20 percent while regular milk in half-gallon containers decreased 16 percent. The average retail price for rBST-free milk dropped about 11 percent in a year’s time. The average retail price for organic milk in half-gallon containers dropped about 4 percent in the fourth quarter of 2009 compared to the prior year.

For the fourth quarter of 2009, the average price for one dozen regular eggs was $1.55. The average price for “cage-free” eggs was $2.77 per dozen, about 80 percent more per dozen than regular eggs. Compared to a year ago (fourth quarter of 2008), regular eggs declined 13 percent while “cage-free” eggs declined 9 percent.

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Contacts: Tracy Taylor Grondine
(202) 406-3642
tracyg@fb.org
Cyndie Sirekis
(202) 406-3649
cyndies@fb.org