Coshocton Tribune, OH
11-17-07
The cost of Thanksgiving dinner
It's true. Food for preparing this year's Thanksgiving feast will cost more than it
has in the past. As a matter of fact, consumers have paid more for food products
this whole year, but there is some conflicting, complex information surrounding
the reason for this increase. Biofuel production, increased energy costs and
world food demand are a few factors known to impact grocery bills.
Alternative energy efforts (such as ethanol production) have arguably increased
the demand for corn in the United States. By the rules of supply and demand,
this in turn increases the price farmers pay for corn to feed food producing
animals such as dairy and beef cattle, chickens and hogs. This will ultimately
result in higher market prices for milk, meat, eggs and other animal products.
Corn is also widely used in making other food products. If corn prices were to
increase 30 percent, the average price of food across the board would increase
1.1 percent. And a $1 can of pop contains about 2 cents of corn (high fructose
corn syrup). If the price of corn doubled, the increase of corn input to produce the
pop would be 2 cents (as reported by Iowa State University Center for
Agricultural and Rural Development).
The world is also coping with a tight wheat supply. Since wheat demand remains
strong and supplies are running lower than normal, wheat food products have
increased as much as 10 percent.
World food demand is another factor influencing the cost of food. The world at
large is experiencing strong economic growth. This means people worldwide
have more money to spend on food, which causes a higher demand for U.S.
agricultural products.
U.S. turkey supplies are higher this year than in 2006, but in addition to the U.S.
demand in general, export demand is now stronger. This will lead to slightly
higher market prices. But agricultural economists say consumers might not notice
a change in the price they pay for this particular Thanksgiving favorite. Because
retailers want consumers to purchase their entire Thanksgiving meal products in
their respective stores, they often offer turkey specials (sometimes taking a loss),
to entice shoppers into their stores.
Processing, transporting, and packaging food all take energy. So, consumers
directly and indirectly absorb increasing energy costs as they make their food
purchases. To place a number on the off-farm economic impact food prices have,
80 cents of every dollar is accrued off-farm (i.e. transporting, processing,
packaging, etc.).
Although this year's Thanksgiving feast is bound to cost consumers more than in
the past, hopefully this article provides some insight regarding the source of the
increase and illustrates how complex the food equation can be.
Wishing you all a happy Thanksgiving.