Friday, May 27, 2011

The march of food prices continues up the steps

Prices continue to rise for food.  Although they are called an outcry for democracy now, the increasing price of foods was one of the sparks in the Tunisia uprising.
The causes are varied.  Certainly poor weather –even apart from weather blamed on global warming- has always caused  fluctuations in food pricing.  But we are getting to the point were both demand, because of increased world population, and supply, because of high oil prices, is acting in concert.
Alan Bierga and Leslie Patton, Bloomburg, 25 May 2011, ht NC
Groceries and restaurant meals rose 2.4 percent in the four months through April, the most to start a year since 1990, government data show. During the period, rice, wheat and milk futures touched the highest levels since 2008, and retail beef reached a record. Yesterday, J.M. Smucker Co. announced an 11 percent price increase for Folgers coffee, the best-selling U.S. brand, after the cost of beans almost doubled in a year.
“It’s going to be a tough year” for U.S. shoppers, said Lapp, who is president of Advanced Economic Solutions, an agriculture consultant in Omaha, Nebraska. “You’re looking at an economy where a lot of consumers are under some serious pressure from food and fuel costs.”
Meat Costs Rise
In the first four months of 2011, meat and fish prices rose 4.3 percent, according to the bureau. Consumers paid about $2.722 for a pound of ground beef, a 14 percent increase, while a fresh whole chicken cost $1.261 a pound, slightly lower than $1.28 at the start of the year.
The price of a pound of field-grown tomatoes last month reached $2.27, the highest since 2004 and up 43 percent from the beginning of the year, the bureau said. Fresh fruit and vegetables, which are more volatile because of weather, fell 1.3 percent in April. They have already risen 3.4 percent this year, according to government data.
Paul Ziobro, Wall Street Journal, 26 May 2011.
Starbucks Corp. is raising prices on bagged coffee sold at its U.S. cafes by an average of 17% in response to escalating coffee costs...
Coffee makers have been dramatically raising prices in response to increases in green coffee costs. Tuesday, J. M. Smucker Co. raised prices on Folgers, Dunkin' Donuts and Millstone coffee by an average of 11%.
Future prices of Arabica coffee, the bean variety Starbucks says it uses exclusively, have doubled over the past year on Intercontinental Exchange, boosted by consecutive poor harvests from major grower nations, a slumping dollar and speculative buying.
Karen Talley, Wall Street Journal, 26 May 2011
"We saw quite a bit of inflationary pricing," during the third quarter, and the pressure is expected to continue in the current period, Chief Financial Officer Richard Galanti said during a conference call with analysts.
"Everything from dry dog food up 3.5%, to all your detergents of 10% plus, to various waters 10% or so, to all your plastic, your plates and your plastic cups and everything, 8% to 9%," Mr. Galanti said. "We're fighting to keep them lower, keep them delayed."
GRFA [Global Renewable Food Alliance] Press Release

TORONTO, CANADA--(Marketwire - May 24, 2011) - As the G20 Agriculture Ministers meet for the first time today in Paris to discuss food security, the Global Renewable Fuels Alliance (GRFA) is urging those ministers to focus on the real driver behind rising food costs – the rising price of crude oil.
High oil prices impact global food prices in many ways. Oil price spikes can increase the cost of fertilizer, inflate the cost of packaging and raise the cost of transportation. The GRFA first highlighted the direct link between food and oil prices in March and are seeing this dangerous relationship continue today.
The following graph clearly outlines the strong correlation between the price of crude oil and the UN FAO's Food Price Index.

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