Thread: US warns extreme food prices will stay

Food prices could reach 2008 level: USDA

By Christopher Doering Christopher Doering
Thu Feb 24, 3:18 pm ET

WASHINGTON (Reuters) – U.S. consumers could see food costs spiking to levels seen during the food crisis of 2008 as higher commodity and energy prices force companies to raise prices on products lining grocery store shelves, the Agriculture Department said on Thursday.

Food prices are forecast to rise a sharp 3.5 percent this year -- nearly double the overall inflation rate. The lion's share of the increase is expected in the second half of 2011 when the recent uptick for commodities, such as corn and soybeans, makes its way through the food system. Just last month, USDA forecast an increase of 2.5 percent in 2011.

Food prices soared to 4 percent in 2007 and rose to 5.5 percent a year later -- the biggest increase since 1990 -- as stockpiles ran low around the world.

Volatile agriculture and energy prices could help food prices challenge those levels in 2011, said USDA economist Ephraim Leibtag at the department's annual Outlook Forum.

"Given that it's still earlier in the year, I'm prone to be conservative on the side of the forecast," said Leibtag. "It's a possibility. I wouldn't be shocked but I'm not predicting it now."

FOOD INFLATION COULD LEAD TO RIOTS

Global food inflation, the result of growing demand for food and tight commodity supplies following catastrophic storms and droughts in leading agriculture producers such as Russia and Australia, is a growing worry for world leaders.

World Bank chief Robert Zoellick said last week global food prices have reached "dangerous levels," and warned they could complicate fragile political and social conditions in the Middle East and Central Asia.

It would be a stark similarity to 2008 when soaring food prices sparked food riots and led to political instability in some parts of the world, including Haiti and Egypt.

Agriculture Secretary Tom Vilsack said the United States and other global producers are "better prepared to respond" to rising food prices after the run-up in 2007 and 2008. "We're keeping an eye on this," he said.

In its new forecast, USDA said food will rise party due to higher costs for meats, poultry and fish, which make up 12.5 percent of total food spending. Overall, costs for these items are forecast to rise 4 percent compared with 3 percent forecast last month.

Prices for fruits and vegetables, which account for 8.4 percent of food spending, also will rise 3.5 percent, an increase from 3 percent forecast in January. Cereals and bakery products were increased to up 4 percent from 2.5 percent, and sugar and sweets up 3 percent from 2.5 percent.

Despite the recent pullback for some commodities such as wheat, soybeans and corn remain near a 2-1/2 year high. Oil surged to 2-1/2 year highs near $120 a barrel on Thursday as the revolt in Libya choked exports but prices later eased as Saudi Arabia assured European refiners it could fill any supply shortfalls.

Energy is used for everything from producing, transporting and making packaging for food.

RETAILERS FACE HIGHER INPUT COSTS

Big companies have had to adjust to higher raw material costs. Kellogg Co, the world's largest breakfast cereal company, and consumer goods giant Unilever have boosted prices on many of their products to offset rising costs for ingredients such as grains and sugar.

Grocers are doing what they can to keep prices low, as they do not want to turn off shoppers already feeling pressure from higher gasoline costs and the generally bleak economy.

Leibtag said the willingness of retailers to absorb price increases and not pass all of them onto consumers is, for now, helping keep prices below their 2007 and 2008 levels.

"We do have risks of higher inflation, but retailers are facing a bigger challenge in 2011," he said. "We're coming off of a recession where everyone is more concerned about their prices, their budget, their spending."

Wal-Mart Stores Inc, which is the largest U.S. grocer, said on Tuesday it would work with suppliers to keep costs down as much as possible, and only pass along price increases when necessary. Wegmans Food Markets has said it will freeze prices on 40 products through 2011.

(Additional reporting by Jessica Wohl in Chicago; Editing by Lisa Shumaker)

http://news.yahoo.com/s/nm/20110224/wl_ ... foodprices

To add to the cost of goods, over the next three years there will be more regulations placed on the trucking and transportation sectors. I can see nothing but further inflated prices due to the regulations. Production will be hindered and this will add to cost.

We cannot get rid of the commies/fascists quick enough.

Fire Ray LaHood!

Not only will production/efficiency be hindered and costs will go up, but the regulations will further enslave Americans through smart use of technologies..............further into a corner, all so the corporations can buy more efficiency and market shares.

To big to fail policies seem to play out in many manners, not only through direct infusions of cash, but, also by regulations put into place that favor the large over the small, thereby eliminating honest competition. JMO

AND YET THEY SEE FIT NOT TO GIVE A COLA TO THOSE ON SS AND VETERANS BENEFITS. NOT FOR ONE YEAR BUT FOR THE PAST TWO YEARS THERE HAS BEEN NO COLA. FOOD IS NOT THE ONLY THING THAT IS HIGH, BEFORE TO LONG GAS PRICES ARE GOING TO GO HIGHER THAN WHAT THEY ARE NOW. BUT, THERE IS ONE GROUP OF PEOPLE WHO DON'T HAVE TO WORRY ABOUT WHERE THEIR NEXT MEAL IS GOING TO COME FROM. I'M SPEAKING OF ILLEGAL ALIENS THESE PEOPLE DON'T HAVE TO WORRY ABOUT ANYTHING BECAUSE THE FEDERAL GOVERNMENT IS TAKING GOOD CARE OF THEM WHILE THEY TAKE FROM AMERICANS.

LadyStClair wrote:

BUT, THERE IS ONE GROUP OF PEOPLE WHO DON'T HAVE TO WORRY ABOUT WHERE THEIR NEXT MEAL IS GOING TO COME FROM. I'M SPEAKING OF ILLEGAL ALIENS THESE PEOPLE DON'T HAVE TO WORRY ABOUT ANYTHING BECAUSE THE FEDERAL GOVERNMENT IS TAKING GOOD CARE OF THEM WHILE THEY TAKE FROM AMERICANS.

There's another group that fits that description too. That would be those idiots politicians in Washington, D.C.