U.S. Retail Food Prices Ease

LANSING - Jan 10/08 - MFB -- Retail food prices at the supermarket decreased slightly in the fourth quarter of 2007, according to the latest American Farm Bureau Federation (AFBF) Marketbasket Survey. The informal survey shows the total cost of 16 basic grocery items in the fourth quarter of 2007 was $41.61, down about 5% or $2.42 from the third quarter of 2007.

Of the 16 items surveyed, 10 decreased, four increased and two stayed the same in average price compared to the 2007 third-quarter survey.

Corn oil showed the greatest decline in price, down 58 cents to $2.43 per 32-ounce bottle. Mayonnaise dropped 50 cents to $2.92 for a 32-ounce jar.

Other items that decreased in price were: vegetable oil, down 48 cents to $2.25 for a 32-ounce bottle; Russet potatoes, down 28 cents to $2.29 for a 5-pound bag; bacon, down 25 cents to $3.35 per pound; apples, down 22 cents to $1.27 per pound; flour, down 21 cents to $1.70 for a 5-pound bag; ground chuck, down 12 cents to $2.69 per pound; and sirloin tip roast, down 11 cents to $3.75 per pound.

"The fourth quarter of 2007 was pretty hard on the meat and oil markets," said AFBF economist Jim Sartwelle. "Beef and pork production was up sharply and domestic retail demand was down, which is typical during the holiday season. The oils seemed to take a break from three straight quarters of increase, but that is unlikely to last long."

Farm Bureau volunteer shoppers reported a 3-cent drop in price for whole milk at $3.91 per gallon.

"Retail milk prices took a breather from a wild 2007 ride during the fourth quarter," said Sartwelle. "For the time being, it appears domestic milk prices have leveled off, in part, because the increased foreign demand for U.S. dairy products that began in the first quarter of 2007 has stabilized."

A 15-ounce box of toasted oat cereal showed the largest price increase, up 15 cents in the fourth quarter to $3.05. Other items that increased in price were: a dozen large eggs, up 10 cents to $1.61; a 20-ounce loaf of white bread, up 8 cents to $1.62; and cheddar cheese, up 3 cents to $4.10 per pound. Two items, whole fryer chickens and pork chops, stayed the same in price at $1.28 and $3.39 per pound, respectively.

As retail grocery prices have increased gradually, 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%, according to U.S. Department of Agriculture (USDA) statistics," Sartwelle said.

Using that percentage across-the-board, the farmer's share of this quarter's $41.61 marketbasket total would be $9.15.

According to USDA statistics, Americans spend just under 10% of their disposable income on food annually, the lowest average of any country in the world.

Again in the fourth quarter of 2007, Farm Bureau volunteer shoppers across the nation reported retail prices for different types of milk and eggs.

For the fourth quarter of 2007, shoppers reported the average price for a half-gallon of regular whole milk was $2.38, down 2 cents from the prior quarter. The average price for one gallon of regular whole milk was $3.91, down 3 cents from the third quarter. Comparing per-quart prices, the retail price for whole milk sold in gallon containers was about 20% 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 $3.06, up 5 cents from the third quarter or approximately 28% higher than the reported retail price for a half-gallon of regular milk ($2.38).

The average price for a half-gallon of organic milk was $3.47, up 4 cents compared to the third quarter or approximately 45% higher than the reported retail price for a half-gallon of regular milk ($2.38).

For the fourth quarter of 2007, the average price for one dozen regular eggs was $1.61, up 10 cents compared to the third quarter. The average price for "cage-free" eggs decreased 10 cents to $2.77 per dozen, but still cost 72% more per dozen than regular eggs in the third quarter.

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