Tuesday, September 02, 2014

Food prices rising with drought, demand

By CRYSTAL HERBER, Herald Staff Writer | 1/14/2013

Summer is months away, but the rising cost of backyard barbecues might already be sizzling in Franklin County residents’ minds.

Ongoing drought and sour financial conditions have put a dent in the quality and quantity of food that producers across the country are able to generate, industry analysts say. As demand continues to increase with little aid in sight for the supply, experts say higher supermarket prices only are a matter of time.

Summer is months away, but the rising cost of backyard barbecues might already be sizzling in Franklin County residents’ minds.

Ongoing drought and sour financial conditions have put a dent in the quality and quantity of food that producers across the country are able to generate, industry analysts say. As demand continues to increase with little aid in sight for the supply, experts say higher supermarket prices only are a matter of time.

Weather impact

The ongoing drought already has taken its toll on farmers and ranchers throughout the Midwestern and Southern states. A severe shortage of feed and water have caused producers to re-evaluate their herds and the cost of maintaining them, Darren Hibdon, extension agent with Ottawa-based Frontier Extension District No. 11, said.

“The biggest issue we’re starting to face is water,” Hibdon said. “Many of our ponds are extremely low. A large number are dry. ... Many of our creeks we depend upon for running water throughout the winter are not running.”

The county’s about 34,000 head of cattle — including about 16,000 beef cows, 18,000 feeder cattle and 1,000 dairy cattle — rely on the area’s surface water as much as crops rely on the rain. With no underground aquifer, Hibdon said, most producers use area ponds, creeks and rivers, rather than mills to get water for their animals. But that option quickly is evaporating.

“Water is really becoming a big issue for our livestock producers, and as we go through the winter, that is going to continue to worsen without some large rainfall event,” Hibdon said.

Water isn’t the only concern. Food for the animals themselves also has been more scarce than in recent years.

Hay can be purchased to feed the cattle — but it comes at a price as hefty as the big, round bales themselves, Hibdon said. And with the widespread drought, producers are being forced to buy hay from farther away, increasing transportation costs, he said.

“Many large, round bales of hay are bringing in the neighborhood of $60 to $85 a bale, when normally that hay would be bringing in the range of $30 to $45 — so big change there,” Hibdon said.

Higher costs for producers ultimately will mean higher costs for the consumers, as livestock owners are forced to sell off all or portions of their herds because of drought conditions. That could lead to major fluctuations in food prices, Hibdon said, because demand will remain the same or increase while the supply drops.

Costly cuts

As director of the Mid-America Nutrition Program in Ottawa, Sharon Geiss keeps a close eye on food prices. Budget cuts coupled with increasing food costs have required the program’s staff to rethink local methods of providing meals that meet the dietary needs of its patrons.

“In the last year, we saw a significant increase in cost,” Geiss said. “From November to the end of December, our costs went up 9 cents a meal.”

Mid-America Nutrition asks for a small donation for each of the meals it serves. With a budget that is set at the beginning of the year, costs that rise during the year present a challenge to the program, Geiss said.

“Our funding basically does not change, and because we don’t charge a fee for what we do, we are dependent upon our grants and our donations from people to cover our costs,” Geiss said. “Oddly enough, even when groceries go up it doesn’t inspire people to give more money to the program.”

The six-county nonprofit program provides about 800 meals a day to seniors 60 and older at 25 congregate sites, as well as home delivery through Meals on Wheels. Cutting costs is difficult to do, Geiss said, because the state requires the program provide a certain amount of protein (meat) to the patrons to meet their nutritional needs. Simply replacing or cutting an item from the menu is not really an option, Geiss said.  

“As far as just not serving it at all, that would not really be acceptable,” Geiss said.

Sometimes soy products can be mixed into the meal items, she said, as a way to provide supplemental nutrition while cutting costs.

Two congregate sites already have been closed in Franklin County as a result of the budget tightening at Mid-America Nutrition.

Grocery prices

At Ottawa’s only locally owned grocery store, Country Mart, the owner said he tries to ease the burden of higher food prices on customers by offering weekly specials. Gary Jones, store owner, said the specials are based on the kind of deals the store is able to get from the wholesale industry.

But the store is seeing increases in prices being charged to the store from the manufacturers, which prompts his prediction that food prices will continue to rise.

“I’m seeing a lot of movement from the wholesale side of the business,” Jones said at the store’s 2138 S. Princeton Circle Drive, Ottawa, location. “I’m seeing a lot of price increases.”

Foods typically costing the most include meats, he said, which are one of the most expensive foods per pound.

Some reports say fresh fruits and vegetables are more expensive, causing people on tight budgets to reach for cheaper, less-healthful options. Jones, however, said he doesn’t agree with that assessment.

“Fresh fruits and vegetables, yeah the prices are going up, but the nutritional value is still there,” Jones said.

Fiscal cliff link

The recent aversion of the so-called “fiscal cliff” reportedly prevented what could have been another massive increase in food prices. If Congress failed to act in time on a deal to avoid the cliff, economists had predicted the price of milk would rise to $8 a gallon.

Fortunately for consumers — and producers — Congress passed an extension of the farm bill for one year, Dave Hornung, with the Franklin County Farm Service Agency, said. The deal, part of the broader fiscal cliff negotiations, allowed current supports to stay in place, Hornung said, averting the higher milk prices for now.

“That would be my opinion, there is some safety net there, for sure,” Hornung said.

The extension dealt with the Direct and Counter-Cyclical Program, which is intended to provide payments to crop producers, Hornung said. There were no direct payments to livestock producers attached to the farm bill, Hornung said, although agencies have provided assistance to producers in getting water to livestock.

The farm bill is the primary agricultural and food policy tool of the federal government. It dictates international trade, environmental conservation, rural communities’ well-being and food safety. The amount of subsidies awarded to producers are mandated by the farm bill, which generally expires every five years.

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