Food Prices Trending Down

By American Farm Bureau Federation,

WASHINGTON, D.C., October 5, 2009 – Retail food prices at the supermarket decreased slightly for the fourth consecutive quarter and are significantly lower than one year ago, according to the latest American Farm Bureau Federation Marketbasket Survey. The informal survey shows the total cost of 16 food items that can be used to prepare a meal was $46.03, down $.26 from the second quarter of 2009 and $4.18 lower or about 10 percent less compared to one year ago.

Of the 16 items surveyed, nine decreased and seven increased in average price compared to the prior quarter.

Shredded cheddar cheese, ground chuck, whole milk, vegetable oil and Russet potatoes declined the most in price from quarter-to-quarter. Shredded cheddar cheese dropped 23 cents to $4.08 per pound, ground chuck dropped 17 cents to $2.65 per pound, whole milk dropped 14 cents to $2.87 per gallon, vegetable oil dropped 13 cents to $2.72 for a 32-oz. bottle and Russet potatoes dropped 11 cents to $2.65 for a 5-pound bag.

Other items that decreased in price were: sliced deli ham, down 5 cents to $4.75 per pound; boneless chicken breasts, down 2 cents to $3.08 per pound; white bread, down 1 cent to $1.76 for a 20-oz. loaf; and sirloin tip roast, down 1 cent to $3.87 per pound.

“Consumers continue to benefit from modest, steady declines in retail food prices at the grocery store. From a nutritional perspective, it’s important to note that our volunteer shoppers found significantly lower retail prices for several protein-rich foods that are staples in the diet of most Americans, including milk, cheese, eggs and ground beef, compared to one year ago,” said AFBF Economist Jim Sartwelle.

Whole milk decreased 27 percent, cheddar cheese decreased 23 percent, potatoes decreased 22 percent, apples decreased 19 percent, eggs decreased 16 percent, vegetable oil decreased 16 percent and ground chuck dropped 10 percent in retail price compared to a year ago, according to AFBF’s survey.

“Again this quarter and compared to one year ago, the foods that declined the most in average retail price are among the least-processed items in our marketbasket,” Sartwelle said.

Several items went up slightly in price compared to the prior quarter: bacon, up 18 cents to $3.37 per pound; orange juice, up 11 cents to $3.13 for a half-gallon; eggs, up 10 cents to $1.44 per dozen; toasted oat cereal, up 9 cents to $2.95 for a 9-oz. box; flour, up 6 cents to $2.48 for a 5-pound bag; apples, up 5 cents to $1.46 per pound; and bagged salad, up 2 cents to $2.77 for a 1-pound bag. Compared to one year ago, bagged salad increased the most in price among the items in the basket, up 16 percent.

AFBF’s third quarter marketbasket survey tracks closely with the federal government’s August 2009 Consumer Price Index ( report for dairy and related products, which showed a slight decline (-.4 percent) for the ninth consecutive month.

As retail grocery prices have increased gradually over time, the share of the average food dollar that America’s farm and ranch families receive has dropped.

“Starting in the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average. That figure has decreased steadily over time and is now just 19 percent, according to Agriculture Department statistics,” Sartwelle said.

Using the “food at home and away from home” percentage across-the-board, the farmer’s share of this quarter’s $46.03 marketbasket would be $8.75.

Further, according to USDA, the average price farmers received for their products in September remained flat from the August level, but was 18 percent lower compared to a year ago.

AFBF, the nation’s largest general farm organization, has been conducting the informal quarterly marketbasket survey of retail food price trends since 1989. The mix of foods in the marketbasket was updated during the first quarter of 2008.

According to USDA, Americans spend just under 10 percent of their disposable annual income on food, the lowest average of any country in the world. A total of 66 shoppers in 29 states participated in the latest survey, conducted in August.


Sidebar: Tracking Milk and Egg Trends

For the third quarter of 2009, shoppers reported the average price for a half-gallon of regular whole milk was $1.89, down 3 cents from the prior quarter. The average price for one gallon of regular whole milk was $2.87, down 14 cents. Comparing per-quart prices, the retail price for whole milk sold in gallon containers was about 25 percent lower compared to half-gallon containers, a typical volume discount long employed by retailers.

The average price for a half-gallon of rBST-free milk was $3.32, up 14 cents from the last quarter and about 75 percent higher than the reported retail price for a half-gallon of regular milk ($1.89).

The average price for a half-gallon of organic milk was $3.77, up 14 cents compared to the second quarter – double the reported retail price for a half-gallon of regular milk ($1.89).

Compared to a year ago (third quarter of 2008), the retail price for regular milk in gallon containers decreased by 27 percent while regular milk in half-gallon containers decreased 26 percent. The average retail price for rBST-free milk dropped about 3 percent in a year’s time. The average retail price for organic milk in half-gallon containers went up and down slightly throughout the year, rising 1.5 percent in the third quarter of 2009 compared to the prior year.

For the third quarter of 2009, the average price for one dozen regular eggs was $1.44. The average price for “cage-free” eggs was $3.04 per dozen, around 95 percent more per dozen than regular eggs.

Regular eggs dropped in retail price by 16 percent from the third quarter of 2008 to the third quarter of 2009; “cage-free” eggs increased in price about 1 percent over the year.

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