Retail Food Prices Continue Downward Trend in Third Quarter of 2009

Posted by: on October 24, 2009

MADISON, WI (WFBF Release)- The quarterly Market Basket survey, conducted by members of the Wisconsin Farm Bureau Federation, found the average retail price of 20-basic food items surveyed was $52.10 in the third quarter of 2009.  This is $1.30 less than the average of $53.40 in the second quarter.

Modest changes were seen in individual items surveyed.  Many items saw less than 1-percent change from the previous quarter and a gallon of whole milk remained at $2.59, the same price as the second quarter.  A gallon of milk was $3.44 in the third quarter of last year.

Milk prices have seen large fluctuations in the last few years.  The price paid to farmers was over $20 per hundredweight (100 pounds of milk or 11.63 gallons) going into 2008.  Now that price is down in the $11-12 range in 2009.  The graph from the USDA’s statistics department shows the volatility in milk prices received by farmers, averaged across the United States, since 1999.

The other two dairy products surveyed, cheddar cheese and butter, had differing results.  A pound of butter averaged $3.26 in the third quarter, up from $3.15 in the previous quarter.  A pound of mild cheddar cheese decreased 9-cents to $3.87 in the third quarter.

The retail prices for chicken breasts and whole chicken both fell in the third quarter.  Whole chicken was down 16-cents to $1.38 per pound and a pound of chicken breasts was down 21-cents to $2.23 per pound.  As poultry production remains strong, international demand has remained weak causing downward pressure on retail prices.

Pork producers have faced tough times in the last year as misinformation about the H1N1 flu virus impacted consumer consumption.  Although the virus is transmitted airborne and the virus is transmitted from humans to swine (not from swine to humans), fear has led to reduced consumption domestically and export markets such as China have banned imports based on ignorance.  Producers have worked to reduce production and Wisconsin producers slaughtered 21-percent fewer hogs in August of 2009 versus August of 2008.  Nationally, as of September, hog inventory in the United States was down 2-percent from 2009.  The reduced production helped pork prices from falling further.  The retail price for a pound of bacon was unchanged in the third quarter of 2009, remaining at $4.68, the same as the second quarter.  Ham decreased only 2-cents per pound to $1.92 and pork chops increased 11-cents per pound to $3.49.

Decreases of over 5% were seen in the following food items: tomatoes, potatoes, Cheerios, and white bread.  Per bushel prices for corn, wheat, and oats are all lower than this same time last year.  While prices paid to farmers for what they produce have declined, prices farmers pay for inputs; including fertilizer, feed, and energy, have continued to increase.  The graph below shows the steady increase in prices paid by farmers.  Compare this to the prices received by farmers and notice the farmer’s costs do not go down when they are paid less.

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