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Thursday, February 9, 2012

Rising Food Prices

A couple of weeks ago, I wrote a post talking about tips on how to save money while shopping for food.  (Click here if you missed it.)  According to experts, it's time to brush up on your money-saving ideas because food prices will probably continue to rise throughout 2012.

One of the biggest reasons for this increase in food prices is the weather.  The Weather Channel website has a feature on 5 foods that are impacted by weather the most as we begin this year.  You can click here to see the whole thing, which includes a couple videos, but here are the highlights.
Frozen Oranges courtesy of AP/Chris O'Meara.
  • Beef--The terrible drought in Texas is showing signs of improving, but it's still very dry there and will be for a while.  The damage has been done, though, to the beef industry.  The dry weather has diminished the ability of farmers to feed their cattle well, so many of them have had to sell off large parts of their livestock creating a shortage of beef--and an increase in the price of beef that is available.
  • Orange Juice--It's been a mild winter, but when it did get cold in places like Florida, Texas and California, it really did a number on the orange crop.  On top of that, other orange-growing countries (Brazil and Mexico, for example) have been very dry, also hurting the crop.  Expect higher OJ prices throughout the year.
  • Milk--As it has done with the beef industry, the Texas drought has caused big problems in the milk industry.  Not only are the herds thinning, but the dryness has provided poor quality food for the cows, which leads to less milk production.  Luckily, much of the milk we buy around here is more or less locally produced.  Other parts of the country, however, aren't so lucky and will see milk prices rise.
  • Peanuts & Pecans--Extremely dry conditions in the Southeast and California have given peanut farmers their worst crop in 30 years.  This could lead to as much as a 30% increase in the price of peanut butter.  Don't think that's that big a deal?  In the US, we spend $800 million on PB each year.  A 30% increase would mean us spending over $1 billion just on PB.  That's a lot of nuts.  Pecans are a little different.  80% of the world's pecans come from the US and although supply is down because of dry weather, demand in places like Asia is not.  This leads to an increase in pecan prices.  (Be sure to watch the Weather Channel's short video on this subject and tell me if you think that the desalination idea makes sense to you.  It sure does to me!)
  • Sugar--The world's biggest sugar cane producer, Brazil, has been extremely dry and the crops have been hit hard.  Sugar prices will continue to rise and, although you may not see it too much when buying a bag of sugar, you probably will notice it in the price of sugary items like cookies and candy.
Just more reason to buy locally produced foods.  And to make your own cookies.

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