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July 18, 2007   Email to Friend 

Jeff Helms
(334) 613-4212
July 18, 2007

Corn is often blamed for today's rising food prices, but Terry Francl, an economist with the American Farm Bureau Federation, says corn is usually a tiny fraction of a product's price.
MONTGOMERY, Ala. -- High energy costs, increased global demand and dry weather in parts of the country continued to put pressure on grocery bills this month as retail food prices jumped 2 percent at Alabama supermarkets. According to the Alabama Farmers Federation's monthly food price survey, the average cost of 20 basic market basket items was $49.95 the first week of July, compared to $48.97 a month ago.

Double-digit increases in the per-pound prices for pork chops, chuck roasts, chicken breasts, eggs and tomatoes were responsible for the higher overall total, but shoppers could still find slight savings on bacon, Boston butts, lettuce and dairy products.

Despite this month's increase in food prices, recent economic analysis by the American Farm Bureau Federation found higher corn prices and high demand for ethanol are not to blame.

"There is little evidence that any food category has been affected by higher corn prices in any significant manner," said AFBF economist Terry Francl.

According to Francl, the value of corn usually is just a tiny fraction of a product's price. For example, the value of corn that goes into a box of corn flakes has been estimated to be 2.2 cents.

"Even if the cost of the corn doubled, it is hard to understand how this relates to an increase of 10 to 20 times that much in the price of a box of cereal," he said.

Rather than ethanol or corn, Francl said high energy costs in the manufacturing and transportation sectors have had a more significant impact on food prices, as have low farm gate prices last year for milk, which forced dairy farmers to cut production.

In Alabama, dairy prices stabilized in July after increasing for the past three months. A half-gallon of milk was down 2 cents to $2.83, and a half-gallon of name-brand ice cream was down a penny to $4.08. Butter was up a cent to $3.28 a pound.

At the meat counter, pork chops increased 17 cents to $3.39 a pound, but bacon and Boston butts were both down 2 cents a pound to $3.48 and $1.75, respectively. T-bone steaks also were down 2 cents to $8.47 a pound, but ground beef edged 6 cents higher to $2.18 a pound, and chuck roasts were up 26 cents to $3.24 a pound.

Whole fryers were up 3 cents to $1.14 a pound, and chicken breasts were up 20 cents to $2.38 a pound. Eggs were up a dime to $1.40 a dozen.

On the produce aisle, tomatoes were 28 cents more expensive at $1.81 a pound, but lettuce was down 2 cents to $1.24 a head. Sweet potatoes also were a good buy at 85 cents a pound, down 3 cents, but red potatoes were up slightly to 75 cents a pound, an increase of 2 cents.

Regional reports collected by volunteer shoppers around the state July 1-8 showed the market basket averaged $47.05 in northwest Alabama, $47.79 in the northeast corner of the state, $51.21 in the central counties and $53.09 in south Alabama.

Alabama Farmers Federation, a member of the American Farm Bureau Federation, is the state's largest general farm organization. It conducts its informal monthly market basket survey as a tool to reflect retail food price trends.

According to Agriculture Department statistics, farmers and ranchers receive only 19 cents out of every retail dollar spent on food, while 81 cents go to off-farm costs associated with marketing, processing and distributing food. In 1980, farmers received 31 cents out of every food dollar.

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