by Diane Olson
This website brought to you in part by the following sponsor:
Find out how to advertise here - Email us! [email protected]
Let’s start the year on a positive note with good news! With all the talk of economic woes, finding price reductions might be the basis for a celebration… albeit an inexpensive one.
The Marketbasket Survey for the final quarter of 2008 reveals Missouri food prices for the 16 items price tested are down from the previous quarter – $45.81 compared to $48.34. Twelve of the items dropped in price while four increased. The national average for the same items was $48.19.
The survey is conducted by volunteer shoppers across the state and country each quarter in an effort to gauge food price fluctuations. The items are representative of a cross section of agricultural commodities including beef, pork, dairy, poultry, fruits, vegetables and products made from grain.
Historically, the last quarter of each year finds prices lower than the other three quarters and 2008 was no exception. Food preferences often change during the holidays. Typically, you see more ham and turkey appearing on dinner tables. Prices for items like ground beef and sirloin tip roast and other meat items drop due to the decline in demand.
Food prices appear to be leveling off following escalating costs in the first half of last year. So soon we forget that energy prices were at an all time high early in 2008 and impacted the cost of transportation, processing, and packaging for many items. However, once food costs increase, the higher prices seem to stick, creating an economic concept known as "sticky prices." It takes longer for the food costs to drop than most other consumer items.
Milk prices dropped to $3.62 per gallon for whole milk compared to last quarter when the same product cost $3.69. One year ago the cost for the milk was $3.95. Non-processed foods like apples and potatoes also decreased in prices during the last quarter. Red Delicious apples dropped $0.41 per pound to $1.28. Five pounds of russet potatoes dropped to $3.67 from the previous quarter price of $3.99.
Other items dropping in price include bacon, whole fryers, eggs, cereal, flour, bread and corn oil. Prices increased for center-cut pork chops, cheddar cheese, vegetable oil and mayonnaise.
Americans spend about 10% of their disposable income on food eaten at home and away from home. As retail prices increase, consumers are utilizing a variety of ways to stretch the food dollar.
Agricultural producers spend their careers providing a safe, affordable and abundant food supply for which they receive only 19 cents of each dollar spent on food. The farmer’s share of the fourth quarter market basket survey is only $8.71, despite the increased cost associated with production.
(Diane Olson, Jefferson City, is director of promotion and education for Missouri Farm Bureau, the state’s largest farm organization.)