Rising Food Prices May Not Equate To Higher Profits

(Farm Futures) – As the Northeast cleans up after Hurricane Sandy, other parts of the United States are still dealing with the most severe and extensive drought in at least 25 years – a drought that has spurred talk about higher food prices for consumers.

While the current USDA food price forecast for 2012 is below some recent food inflation rates, shoppers can expect to pay a little more at the grocery checkout this year. This month, USDA estimated food prices will rise 3-4% as impacts of the drought catch up with the food supply.

CommonGround, a collaboration between the United Soybean Board and the National Corn Growers Association to improve conversation among women from farms and cities, explains that U.S. farmers want consumers to understand exactly where those extra food dollars end up.

“Believe me, as a farmer and a mom of one child, with another on the way, I definitely pay attention to food prices because they affect my family’s pocketbook, too,” says Iowa farmer and CommonGround volunteer Sara Ross. “I know it can sometimes be tough to look past the price tag. But it’s important for families to remember that, as Americans, we are very fortunate to only have to spend 10% of our income on food, versus the 18-25% spent by people in other countries around the world.”

CommonGround developed the graphic below using data from the USDA Economic Research Service to illustrate the breakdown of a consumer’s dollar: Farm and agribusiness: 11.6 cents; Food processing: 18.6 cents; Packaging: 4 cents; Transportation: 3.5 cents; Retail trade: 14.6 cents; Food service: 33.7 cents; Energy: 6.8 cents; Finance and insurance: 4.4 cents; Other: 3.8 cents.