Food prices rise by 16% year-to-date

0 Comments | Deseret News (Salt Lake City), Aug 1, 2008

ST. LOUIS (AP) -- Rising costs for fuel, feed and fertilizer propelled grain prices to all-time highs in June, raising the overall price of crops and livestock by 16 percent this year compared to last year.

Corn and soybeans hit record prices. Wheat slipped from historic highs in March but is still up steeply from last year, according to a U.S. Department of Agriculture report released Thursday. Grain prices gained 42 percent for the year overall.

Prices for farm products rose 1.9 percent in June alone, according to the report. Grain staples including wheat and soybeans rose 1.6 percent during June. The price of livestock rose less than 1 percent.

The annual report measures the price that farmers receive for their goods, not the ultimate price that consumers pay for food. Crops and livestock costs amount to a fraction of the final cost of food, after transportation, packaging and marketing costs also are factored in.

While soaring grain prices mean big profits for farmers and agribusiness firms like Archer Daniels Midland Co. and ConAgra Foods Inc., the trend is hurting meat companies like Tyson Foods Inc. Meat prices haven't nearly kept pace with the cost of grain, which is the biggest input cost for meat processors.

The USDA report shows corn and soybean prices climbing rapidly since 2007. The cost for cattle and hogs has largely stagnated. Even though corn farmers seem able to pass on the higher cost of their fertilizers and fuel, meat companies haven't been able to do the same, said USDA statistician Daryl Brinkman.

"Demand for (meat) is not quite there. And there is plenty of supply to meet that demand, so that is keeping those prices pretty steady," Brinkman said.

Corn and soybean farmers, on the other hand, are seeing more demand than ever for their crops. While exports are increasing, so is domestic use of the crops for biofuels such as ethanol and biodiesel.

Corn sold for an average of $5.61 a bushel in June, up 69 percent from $3.32 in 2007. Soybeans sold for $14.20 a bushel, nearly double last year's figure of $7.56. Corn went for just $2.14 a bushel in 2006 and soybeans sold for $5.61.