An appetite for energy
What's pulling food costs higher? In part ...
While struggling with food prices isn't a new challenge for poorer Americans, middle-class consumers are feeling the strain of climbin
What's pulling food costs higher? In part ...

By Debbie Blossom

Published: May 18, 2008

She enjoyed her Dr Peppers, steak dinners and family outings to Johnnie's and KFC.

But things have changed at the Pickens household, thanks to what it now costs to feed this Edmond family of five, which grows to six when her stepdaughter is there.

"My grocery bill has gone from $150 every two weeks to $200 to $225 every two weeks,” she said.

To help stretch her shrinking food dollars, Pickens no longer splurges on expensive snacks, higher-priced meat and seafood or name-brand soft drinks.

Her high school daughter packs a lunch at least three times a week, "and the only red meat we eat is hamburger,” she said.

Even outings to their favorite fast-food restaurant are on hold, now that a family visit costs $27.

"We've cut out eating out almost completely,” she said.

Pickens is among a new wave of middle-class Americans feeling pinched as food prices continue to soar, with no relief in sight.

Americans spent an average of $1,926 on groceries per person in 2007, a 4.2 percent increase from 2006, according to the U.S. Department of Agriculture.

Prices are expected to increase between 3.5 percent and 4.5 percent this year, an April 10 Congressional Research Service report shows. The Agriculture Department expects prices to hit $2,013 per person.

That's the largest annual jump since 1990, after relatively stable prices for almost two decades.

Some foods visibly cost more. The price of eggs rose almost 30 percent, while milk and flour increased more than 13 percent, and rice prices rose almost 10 percent, the U.S. Department of Labor reported.

Economists with the Agriculture Department blame the increase in prices on worldwide economic growth, weather factors in parts of the world, restrictions on food exports and the relatively new biofuel industry.

Oklahoma agriculture experts agree the cost of fuel is one of the biggest influences on prices.

"In the past two years, we've seen steadily increasing fuel prices, so everyone in the transportation and distribution industries has adjusted their costs accordingly,” said Randy Holcomb, a professor of agricultural economics at Oklahoma State University.

Fruits and vegetables right off the farm are cheap commodities, but those products must travel hundreds of miles and change hands several times before they reach consumers, Holcomb said.

So many foods today are value-added, and those processed foods now in more demand from consumers go through several phases before they reach the supermarket, said Oklahoma Cooperative Extension Service agricultural economist Daniel Skipper.

"Each time you add another step, you need energy to get there, and that cost is translated to the consumer,” Skipper said.

But other factors figure into the food-cost equation, Skipper said. The weak U.S. dollar has increased the demand for exported food products and decreased the supply in this country. More corn is being planted for ethanol, and poultry and beef prices have jumped due to feed costs.

Wholesale prices jumped 7.6 percent in 2007, the biggest jump in 27 years, said Mike Donohue, spokesman for the National Restaurant Association. And those increases are continuing, he said.

A monthly restaurant performance index compiled by the association showed most eatery operators who were surveyed said sales declined in March compared with March 2007.

Crest Foods President Bruce Harroz said fuel and freight prices are the main culprits for the jump in wholesale prices.

His company has absorbed much of the toll, he added, but that won't work indefinitely.

Harroz said he keeps costs down some by offering weekly store specials. And he says he's seeing a trend.

"Our business has been up the last three to four months, I can tell more people are coming back to the grocery stores,” he said. "The first thing they're going to cut out is the restaurants.”

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