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Survey Finds Retail Food Prices Edge Higher in Second Quarter

Farmer's share of food dollar hovers at 19%.

July 12, 2010

4 Min Read

Retail food prices at the supermarket increased slightly during the second quarter of 2010, 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 one or more meals was $47.20, up $1.66 or 4% compared to the first quarter of 2010. The total average price for the 16 items increased about 2% compared to one year ago.

Of the 16 items surveyed, nine increased and seven decreased in average price compared to the prior quarter. Meat items including sirloin tip roast, sliced deli ham, bacon, boneless chicken breasts and ground chuck increased the most in dollar value since the first quarter.

Sirloin tip roast and sliced deli ham increased 41 cents to $4.10 and $5.24 per pound, respectively; bacon increased 33 cents to $3.53 per pound; boneless chicken breasts increased 32 cents to $3.25 per pound; and ground chuck increased 26 cents to $2.89 per pound.

"Consumers are paying a bit more for most meats at the grocery store on average this quarter," says AFBF economist John Anderson. "As livestock producers of all types have reduced the size of their herds, wholesale meat supplies have tightened up, which is now affecting consumers."

Other items that increased in price since the first quarter were bagged salad, up 13 cents to $2.80 for a 1-pound bag; flour, up 9 cents to $2.35 for a 5-pound bag; bread, up 5 cents to $1.76 for a 20-ounce loaf; and orange juice, up 2 cents for a half-gallon to $3.

Seven foods dropped in price compared to the prior quarter: Russet potatoes, down 25 cents to $2.51 for a 5-pound bag; eggs, down 21 cents to $1.53 per dozen; vegetable oil, down 13 cents to $2.61 for a 32-ounce bottle; shredded cheddar cheese, down 10 cents to $4.16 for one pound; whole milk, down 9 cents to $3.06 per gallon; apples, down 4 cents to $1.46 per pound; and toasted oat cereal, down 2 cents to $2.95 for a 9-ounce box.

Compared to a year ago, the following items experienced increases in price: eggs, up 14%; bacon, 11%; and sliced deli ham, 9%. Meanwhile, several of the items that decreased in retail price this quarter also showed year-to-year declines including: potatoes, down 9%; vegetable oil, 8%; shredded cheddar cheese, 3%; and flour, 3%.

"The economic recovery continues to be very slow," Anderson says. "Where retail food prices will head in the next quarter or two is uncertain and depends to some degree on whether or not consumer confidence remains soft or begins a strong rebound."

Tracking milk and egg trends

For the second quarter of 2010, shoppers reported the average price for a half-gallon of regular whole milk was $2.06, up 6 cents from the prior quarter. The average price for one gallon of regular whole milk was $3.06, down 9 cents. Comparing per-quart prices, the retail price for whole milk sold in gallon containers was about 25% 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 $3.38, down 24 cents from the last quarter but about 65% higher than the reported retail price for a half-gallon of regular milk ($2.06).

The average price for a half-gallon of organic milk was $3.65, down 1 cent compared to the first quarter of 2010 but about 80% higher than the reported retail price for a half-gallon of regular milk ($2.06).

Compared to a year ago, the retail price for regular milk in gallon containers was down about 2% while regular milk in half-gallon containers increased 8%. The average retail price for rBST-free milk increased about 6% in a year's time. The average retail price for organic milk in half-gallon containers was virtually unchanged compared to the prior year.

For the second quarter of 2010, the average price for one dozen regular eggs was $1.53. The average price for a dozen "cage-free" eggs was $2.91, about 90% more than regular eggs.

Farmer's share of food dollar

As retail grocery prices have increased gradually over time, the share of the average food dollar that America's farm 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 is now just 19%, according to U.S. Department of Agriculture statistics," Anderson says.

Using the "food at home and away from home"%age across-the-board, the farmer's share of this quarter's $47.20 marketbasket would be $8.97.

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

AFBF, the nation's largest general farm organization, has been conducting the informal quarterly marketbasket survey of retail food price trends since 1989. A total of 85 shoppers in 32 states, including Michigan, participated in the latest survey, conducted in May.

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