Low-income families may find themselves struggling to pay for items like milk, eggs, beef and bread this year, according the latest Food Price Outlook for 2014 released recently by the U.S. Department of Agriculture (USDA).
The report says food-at-home pricesthat means prices for grocery store productsare predicted to increase by somewhere between 0.75 percent to 1.25 percent.
That might not seem like much, but many of the larger price hikes are among basic foods that sustain low income families. With cattle herds and dairy herds contracting, in particular, meat and eggs are harder to come by; an increase in wheat and wheat flour prices, as reported by the LA Times, will affect everything from breakfast cereal to pasta to your favorite loaf of bread.
The beginning of 2014 might be especially worrisome for low income families, since the consumer price index for food-at-home items, according to the USDA, has already increased more in the first three months of 2014 than it did in all of 2013.
Looking at historical data and the price trajectory, the government agency predicts that inflation of food prices will end up being relatively average this year, but that means that some food prices will increase while others decrease, and it matters which is which; as the saying goes, the devil is in the details.
In particular, some basic foods will cost more, even having adjusted for inflation, than they did in 2013:
- Milk: Price increased 1.8 percent from February to March of 2014 and is up 4.8 percent since March 2013
- Eggs: Increased 2.1 percent in March and is up 9.9 percent since March 2013
- Fresh fruit: Increased 2.1 percent in March and is up 5 percent since March 2013
- Beef and veal: Increased 1.9 percent in March and are up 7.4 percent since March 2013
- Flour: According to the Labor Department, the price per pound has increased 10 percent over the last year.
Reasons for Increased Prices
Weather and a globalized economy are two big factors in driving up basic food prices.
Cattle and dairy herds have gotten hit hard both by weatherthe California drought, especially, has taken a toll on the animalsand an increasing demand for U.S. exports. Ground beef now costs an average of $3.55 per pound, according to CNN, and increasing demand for beef in Asia pushes up domestic prices as farmers balance smaller herds with a larger market.
The same can be said for milk, according to NBC. An increasing demand for the U.S. product in China means that domestic consumers are paying a premium for what used to be a fairly cheap basic food. Marin Bozic, associate director of the Midwest Dairy Foods Research Center, predicted that milk prices would continuing rising in 2014, despite the fact that they were already at near-historic highs.
Eggs are another trouble area, but theyre also one of the most volatile markets, according to the USDA. While prices may drop later this year, for the moment low income families may experience sticker shock at the grocery store.
Finally, wheat prices are increasing due in large part to the dry weather in the U.S. Midwest. According to the Wall Street Journal, 20 percent of Kansas and 38 percent of Oklahoma is experiencing an extreme drought, which means that plants arent growing as expected in two of the major wheat production regions.
Add to that the fact that the U.S. is the worlds largest wheat exporterand wont be able to meet demand if the crops dont growand consumers may be hit with high prices on all things wheat-related.
Where Are All the Limes?
While the general population might be concerned with price hikes on basic food products, restaurant owners are preoccupied with a very specific product: limes.
Ninety percent of limes in the U.S. are imported from Mexico, and from the state of Michoacán, in particular. However, recent damaging storms, a bacterial virus, and interference from the Knights Templar drug cartel have caused skyrocketing prices for the fruit.
Danny Mena, owner of a Mexican restaurant in New York, explained scope of the rising costs: I used to pay $25 for a case of limes Now the highest Im paying is $147.50 a case. Its getting tough to keep our prices the same. Mena is particularly worried about having to increase the prices of mixed drinks, like margaritas, as well as tacos.
Consumers are seeing higher prices at the grocery store, too: east coast stores are charging anywhere between $1.60 and $3 for just one lime.
For low income families, limes arent likely to be a primary concern, since the prices of milk, bread, and other basic foods are likely to be more pressing issues. However, lime prices are indicative of just how interconnected our global agricultural economy is: throw a rock in the pond in one country, and the ripples may be felt around the world.
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