Archive for Tuesday, May 6, 2008

Chicken, pork prices next to go up

Jerry Velasco places prices on seafood at Save More Meats on Monday in Pacifica, Calif. Food inflation is expected to continue.

Jerry Velasco places prices on seafood at Save More Meats on Monday in Pacifica, Calif. Food inflation is expected to continue.

May 6, 2008

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Americans may be getting another helping of food inflation, and it seems likely to come from higher prices for chicken and pork.

Overall food inflation could double this year, lifted by the rising costs of fuel, corn and soybeans, some analysts predict.

Food inflation hit 4 percent last year, up from 2.4 percent in 2006. While beef prices were already high, chicken and pork prices didn't reflect record costs for feed and fuel. That's poised to change as chicken and pig producers who have been losing money slaughter more animals to decrease the supply and raise the prices they can charge.

Higher food inflation would further challenge shoppers who are already limiting themselves to sale items and store brands as they contend with the worst food inflation since 1990.

Mary Lee Rydzewski, a retired Amtrak engine dispatcher who lives in Cheshire, Conn., says she has already switched to store brands and sale items because of higher food prices. If they increase more, she plans to cut back again.

U.S. shoppers spent 5.8 percent of their income on food in 2006, according to the U.S. Department of Agriculture - a lower proportion than any other nation. In the United Kingdom, consumers spent 8.7 percent of their income on food, and in most of the world it's at least 10 percent.

But the U.S. portion seems certain to rise, as chicken and pig producers say prices have to go up as feed costs increase.

"American consumers are only just beginning to feel the impact of sharply higher food prices," said Pilgrim's Pride Corp. Chief Executive Clint Rivers. The nation's largest chicken producer posted a wider quarterly loss Monday as it paid more for feed and took a restructuring charge.

Tyson Foods Inc., the world's biggest meat producer, forecasts that its expenses will rise $1 billion this year, including $600 million for corn and soybean meal and $100 million on grain. The balance will come from higher prices for cooking oil, breading and fuel costs, the company said. Last week Tyson reported a $5 million second-quarter loss and withdrew its earnings outlook, saying feed prices were too volatile.

"I think food inflation has got to go up," said C. Larry Pope, president and chief executive of Smithfield Foods Inc., the world's largest pork producer, in a recent speech. "Everything that uses wheat, everything that uses corn, everything that uses corn syrup has got to go up."

Comments

igby 7 years ago

In the world hot dogs, beef oscar mayer's are better than the chicken and pork ones. FYI.

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