Originally created 01/26/01

Food prices will stay in check



Gas prices are high.

Rolling blackouts are shutting down California's fruit and vegetable processing plants.

And the Southern drought is unrelenting in its fourth year.

But energy troubles and bad weather aren't expected to mean significantly higher food prices this year, economists say.

The overall slowdown of the American economy is holding down food prices, University of Georgia agriculture economist Bill Thomas said.

Food prices overall are expected to increase from 2 percent to 2.5 percent this year. That's in line with last year's 2 percent increase, according to the U.S. Department of Agriculture.

But the range of increase in different products tells the story of farmers' troubles this past year.

Because grain prices remain low, dairy, beef and poultry prices will show the least increase. Farmers are paying little for their feed, which reduces their input costs.

However, grain products, such as breakfast cereals, are expected to show a steeper increase because grain represents only about 10 percent of the cost of cereals. The major cost is in the packaging and processing.

Prices of products that must be packaged and processed are increasing because of higher energy costs - fuel and, in some states, electricity.

Georgia gasoline prices are lower than in many states but are still higher than what farmers are used to.

Other farmers who have battled the drought for the past three years aren't likely to get much relief this growing season. Ground water levels have yet to recover and irrigated crops are the only ones that have survived in south Georgia.

That means a higher cost to the farmers who irrigate.

"The squeeze they're getting themselves in is, the price of energy is going up. And they may not be able to pass on their increased cost to the consumer," Mr. Thomas said.

Consumers should, in fact, spend about 10.3 percent of their income on feeding their families. That's down from 10.4 percent in 1999.

"Food prices will go up less than other items you'll buy this year," Mr. Thomas said.