<img src="http://www.joplinglobeonline.com/images/zope/extra.gif" border=0>Small businesses, consumers cooked by rising food prices<font color="#ff0000"> w/ link to learn more about the history of food prices </font>

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March 15, 2008

Anonymous The Joplin Globe Sat Mar 15, 2008, 05:20 PM CDT

By Melissa Dunson

mdunson@joplinglobe.com

WEBB CITY, Mo. — Carlos Rivera’s arms get less of a workout at the grocery store these days, but his wallet has to do twice as much heavy lifting.

“You used to carry your groceries in two hands, but now it only takes one hand, and I spent the same amount of money that I used to,” Rivera said. “I used to spend $155 a week on groceries for my family. Now it’s $190, and it’s not even the same amount of groceries.”

Rivera is one of millions of Americans struggling with soaring food prices.

The Congressional Research Service recently reported that food prices rose 4 percent last year, but that higher prices could be on the way. The price increase for food last year was the highest since 1990, according to the report.

The U.S. Department of Agriculture is predicting that food prices will go up another 3 to 4 percent this year, while cereals and bakery goods could jump as much as 6.5 percent in 2008.

Rivera faces the price increase on every front. He not only pays more for his own family, but as the owner of The Donut Hole in Webb City, he said he is scrambling to find ways to alleviate his rising costs without passing it on to consumers.

So far, he said, it’s not working.

“We used to sell a glazed doughnut for 44 cents, now it’s 58 (cents),” Rivera said. “I don’t have any choice. I have to make up for the bite (food prices) are taking out of my budget by raising the prices on the donuts.”

Rivera got a 15 percent price increase in September for all of the ingredients from his supplier. In the last year, Rivera said his cost for shortening,

which he buys in bulk, nearly doubled, going from $21.50 to $41.08 while creamy vanilla, which he also buys in bulk, jumped from $15 to $22.62.

Rivera has been in business for 26 years and said he can only hope prices go back down.

Year-to-year rise

Area consumers are seeing food increases across the board.

In March 2007, T-bone steaks were $7.99 a pound; this year they are $8.99.

The foundation for every peanut butter and jelly sandwich, Wonder Bread, is 20 cents more a loaf this year than last, according to prices reported in The Joplin Globe.

Last week, one grocer ran a special for two half-gallon cartons of milk for $3. Last year during the same period, it was three half-gallon cartons for $4.

Other dairy products, such as cheese and cottage cheese, also have jumped. Last week, cottage cheese was $2.79 and another type of cheese was $4.99, compared to last year’s prices of $1.79 and $3.99 for the same products.

Shoppers paid $2.79 for 18 eggs last week, compared to a dozen eggs last year for $1.

Tyson fresh-cut chicken breasts were $1.89 to $2.99 a pound in the Joplin area last year; this year, those prices are $4.99 to $5.69 at the same grocery store.

And fresh produce trucked in from California and Florida is being affected by higher diesel prices. This year, roma tomatoes are 30 cents more per pound, asparagus is 50 cents more, and strawberries nearly $1 more per pound.

A staple of the American diet, wheat, is affecting the price of many items.

Wheat hit almost $13 a bushel in February before falling back to $7.29 a bushel at the beginning of March. It was back up over $12 last week. According to the USDA, the average price for a bushel of wheat was $4.55 in 1996.

At the beginning of the year, the USDA was projecting an average price of $6.45 to $6.85 a bushel for 2008, but that was before crude oil hit $111 last week.

Rolf Wilkin, founder and owner of Eureka Pizza, a regional chain with 12 locations in Missouri and Arkansas, said the price for his ingredients has skyrocketed. Cheese prices are up 85 percent since last year, and it’s costing him more than ever to transport in his tomato sauce from California. Even the cost of his soft drinks is going up because of its plastic packaging.

Wheat prices hit $25 per bushel on the Minneapolis Grain Exchange two weeks ago before falling back, according to Wilkin.

“The historic range has been $3 to $7 per bushel,” added Wilkin, who is based in Siloam Springs, Ark.

‘Rapid inflation’

“The day of cheap food is over,” Wilkin said. “We haven’t seen such rapid inflation in food prices since the 1970s. Let’s hope leisure suits don’t make a comeback, too.”

Wilkin said his business has wheat futures to last through May, but after that, he predicts his costs could soar. In part, he blames rising fuel costs.

Wilkin started the regional chain in 1992, and said he never dreamed he would see the day when pizza would become a luxury item.

“The reality is that you have to change all of your economic assumptions in this market,” he said.

Soybean and corn also have seen price increases. Last April, soybeans fetched $7.14 a bushel and corn was $3.47. In the last couple weeks, soybeans moved to between $12.72 and $13.74, while corn is sitting around $5.30 a bushel.

Local farmers say they’re not the big winners when food prices rise.

Russell Johnson, a Deerfield corn, wheat and soybean grower, said he doesn’t like to see any item jump in price. He has to buy groceries, too.

“I don’t like to see grain prices get silly,” Johnson said. “We work for years to get a good demand built, but it gets ruined when the prices go up like this.”

He fears people will turn to other, less expensive alternatives, creating a problem for farmers down the line. Some wheat farmers have already turned to other, more lucrative crops, such as corn, which is closely tied to the growth for biodiesel.

It’s not a new trend, but one that is complicating an already volatile market, he said.

In a recent report to Congress, USDA analysts also theorized that a 30-year low in worldwide wheat stock is the reason behind price instability. Seven of the last eight years, the world has consumed more wheat than it has produced. The report also listed pressure from other profitable crops such as corn and soybeans for use in biodiesel as another reason for their price increase.

The USDA projects the world’s wheat supply will be restocked sometime in 2008 — if the weather is normal — but predicts prices will continue to be unstable until then.

Consumers such as Rivera, who depends on a variety of food products, don’t see anywhere for their families to go. With food prices rising across the board, there aren’t any cheap alternatives. And it’s affecting everyone. Rivera is a native of Costa Rica and said much of his family still lives there. Just last week, he spoke with his brother over the telephone, who told him grocery prices were skyrocketing there, too.

“People want to say this is all George Bush’s fault. It’s not, it’s ours,” Rivera said. “We are the citizens, and we are just taking this. It’s all of us putting up with this.”

Inflation victims

“If you notice, all of their inflation numbers exclude food and energy — you have got to be kidding me. Everything is soaring in price, and small business and consumers are the victims.”

— Rolf Wilkin, founder and owner of the Eureka Pizza chain, speaking about federal inflation numbers