Proverbs 29:7 The righteous considereth the cause of the poor:

 

Food costs rising at fast clip forces vendors to explain higher prices

 


By Ellen Simon - Associated Press Writer

April 21, 2008

New York — The U.S. is wrestling with the worst food inflation in 17 years, and analysts expect new data due Wednesday to show it’s getting worse. That’s putting the squeeze on poor families and forcing bakeries, bagel shops and delis to explain price increases to their customers.

U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years, according to the U.S. Department of Agriculture. And the agency says 2008 could be worse, with a rise of as much as 4.5 percent.

Higher prices for food and energy are again expected to play a leading role in pushing the government’s consumer price index higher for March.

Analysts are forecasting that Wednesday’s Department of Labor report will show the Consumer Price Index rose at a 4 percent annual rate in the first three months of the year, up from last year’s overall rise of 2.8 percent.

For the U.S. poor, any increase in food costs sets up an either-or equation: Give something up to pay for food.

“I was talking to people who make $9 an hour, talking about how they might save $5 a week,” said Kathleen DiChiara, president and CEO of the Community FoodBank of New Jersey. “They really felt they couldn’t. That was before. Now, they have to.” (Saints See: Report: N.J. is 5th most expensive state for renters - is the fifth most expensive state for renters, making it difficult for many in commonplace jobs to find decent housing, according to a new report from an affordable housing advocacy group. According to the report, a person earning $16.45 per hour -- a bit less than the state's average hourly wage -- would have to work 54 hours a week to afford a two-bedroom apartment at fair market rent. It also found a person earning minimum wage -- $7.15 per hour -- would have to work 124 hours a week to afford the same apartment. The advocacy group said its research demonstrates numerous occupations -- including preschool teachers, child care workers, home health aides, police and fire dispatchers, security guards, school bus drivers and social workers -- don't generate enough income to afford decent housing. New Jersey has the nation's highest property taxes, at $6,800 per homeowner. Tenants don't directly pay property taxes, but are presumed to do so through their rent payments.)

For some, that means adding an extra cup of water to their soup, watering down their milk, or giving their children soda because it’s cheaper than milk, DiChiara said.

U.S. households still spend a smaller chunk of their expenses for foods than in any other country — 7.2 percent in 2006, according to the USDA. By contrast, the figure was 22 percent in Poland and more than 40 percent in Egypt and Vietnam.

In Bangladesh, economists estimate 30 million of the country’s 150 million people could be going hungry. Haiti’s prime minister was ousted over the weekend following food riots there.

Still, the higher U.S. prices seem eye-popping after years of low inflation. Eggs cost 25 percent more in February than they did a year ago, according to the USDA. Milk and other dairy products jumped 13 percent, chicken and other poultry nearly 7 percent.

USDA economist Ephraim Leibtag explained the jumps in a recent presentation to the Food Marketing Institute, starting with the factors everyone knows about: sharply higher commodity costs for wheat, corn, soybeans and milk, plus higher energy and transportation costs.

The other reasons are more complex. Rapid economic growth in China and India has increased demand for meat there, and exports of U.S. products, such as corn, have set records as the weak dollar has made them cheaper. That’s lowered the supply of corn available for sale in the U.S., raising prices here. Ethanol production has also diverted corn from dinner tables and into fuel tanks.

Soybean prices have gone up as farmers switched more of their acreage to corn. Drought in Australia has even affected the price of bread, as it led to tighter global wheat supplies.

The jump has left people in the food business to do their own explaining. Twin Cafe Caterers in lower Manhattan posted a letter on its deli cooler: “Due to the huge increase of the gas, the electricity, the water and all the other utilities, we had to raise the prices a little bit.” It went on to say that all its food prices have risen, too.

Wonder Bagels, in Jersey City, N.J., posted a letter from its wheat supplier, A. Oliveri & Sons, saying the recent situation was unprecedented.

bagel_store_owner.jpg (53439 bytes)
[Owner Sam Iliewat talks with a customer Monday at his Wonder Bagels store in Jersey City, N.J. Iliewat recently posted a letter from the store’s wheat supplier to help explain the increases in food prices to his customers. Max Pasion/AP Photo.]

“The major mills across the country are using words like ‘rationing’ and ‘shortages’ if things continue,” it said. “We will sweat out the summer together, hoping there will be some flour left to purchase at any price.”

The letter called for an immediate halt to exports and a change in farm policy, “stop paying farmers NOT to grow crops.” A new farm bill, stalled in Congress, would expand farm subsidies if it passes, however. ([Saints See: Commentary: If you eat, you can see why farm bill needs reform - If you eat, you should care. You should care food prices rose 4 percent last year in the U.S. -- the largest increase in 17 years. The USDA predicts they will rise another 4 percent this year. Helping to keep food prices up are the increased appetites of China and India, as well as energy costs. You should care that 28 million people in the U.S. will be using food stamps this year. You should care that food pantries all over our country are seeing an increase in use and are finding the amount of food available to them decreasing while costs of that food is rising. Even so, in the U.S., we still pay 10 percent of our disposable income for food while in developing countries they pay 80 percent. You should care that food riots are happening around the world and that 36 countries are in a food crisis. A rioter in Haiti states that he would rather die by a bullet than by starvation. Desperate mothers make cookies out of dirt mixed with shortening and salt. Some days that's all they have to eat. All of this brings us to the Farm Bill of 2002, which expired in 2007. Congress gave it an extension until April 18, today. This bill covers a broad range of programs from food stamps, food safety and aid for food pantries, to saving our wetlands and conservation practices, to regulating imports, exports and farm subsidies. It needs reform. Most family farmers, such as Henry and I used to be want to earn their own income. We still find that ethic throughout Wisconsin. But when disaster strikes in one of the many forms it can on the farm, it is good to have a safety net to keep the farm soluble and food prices stable which is why the subsidies were first introduced in 1933. That said, subsidies have gotten out-of-hand with mega-farms receiving the largest share. They often use the money to acquire more land, pushing aside small and medium sized farmers as well as young farmers starting out. They need to be cut so that those with gross incomes of over $200,000 no longer get subsidy payments. That money could be given to the food aid and conservation programs that need it. Our subsidized exports hurt third-world farmers who are not subsidized and therefore cannot compete on a world market.][Saints See: Farm bill: 'Gridlock rooted in greed' - The farm bill, which comes up about every five years, is a powerful piece of legislation because it affects much more than farms. It funds nutrition programs like food stamps, foreign food aide, environmental and energy programs, and it sets farm policy and spending priorities through 2012. A wide variety of industry and non-governmental organizations are pressing for it to pass. The heart of the bill, though, are its controversial direct farm subsidy payments, which puts thousands of dollars in farmers' pockets simply for owning land and growing crops. The total amount for those "direct payment" subsidies in the current bill is about $26 billion. Efforts to cut the subsidies failed in both the House and Senate, a testament to the political influence the subsidies garner. "I don't know if there's any other explanation for the delay than a gridlock rooted in greed," said Ken Cook, president of the Environmental Working Group, which opposed farm subsidies. "There's plenty of money in this bill right now."][Saints See: Farm Lobby Beats Back Assault On Subsidies - With grain prices soaring, farm income at record highs and the federal budget deficit widening, the subsidies and handouts given to American farmers would seem vulnerable to a serious pruning. But it appears that farmers, at least so far, have succeeded in stopping the strongest effort in years to shrink the government safety net that doles out billions of dollars to them each year. "At some point, you have to step back and ask, 'Does this make sense for the American taxpayer?'" says Rep. Ron Kind. The Democrat from Wisconsin sponsored a measure that would have slashed about $10 billion over five years in subsidies -- and saw it get crushed on the House floor. Grain prices are on a tear this year. On Wednesday, corn prices closed at $5.52 a bushel, up from about $2.20 in 2006, and near the all-time high of $5.70 set earlier this month. U.S. farm income, buoyed by demand for grain from rising middle classes around the globe and the biofuels industry, is projected to reach a record $92.3 billion this year. Still, farmers are expected to collect $13 billion in federal subsidies this year, according to the U.S. Agriculture Department, including payments for commodities, land conservation and emergency assistance. The agribusiness industry plowed more than $80 million into lobbying last year, according to the nonprofit Center for Responsive Politics, which tracks spending on lobbying. Much of that was focused on the farm bill. Today, farmers make up less than 1% of the U.S. population, and agriculture production is dominated by large, industrial farms that have annual sales of $1 million or more. In 2006, average farm household income was $77,654, or about 17% more than average U.S. household income, according to the Department of Agriculture. Average farm household income is expected to be about $90,000 this year. Current law allows subsidies to farmers with annual adjusted gross income of as much as $2.5 million.

african_farmer.jpg (31010 bytes)Some groups argued that farm subsidies hurt poor, unsubsidized farmers in the developing world. Others argued the programs can't be justified with the federal budget deficit as large as it is. Still others blamed the commodities subsidized in the farm bill for contributing to obesity, diabetes and heart disease. Antipoverty group Oxfam America tapped into a grass-roots network around the country to raise awareness of the issue. It paid for television ads that ran in the nation's capital and in targeted states, including Minnesota, home to Democratic Rep. Collin Peterson, chairman of the House Agriculture Committee.] Proverbs 22:16 He that oppresseth the poor to increase his riches, and he that giveth to the rich, shall surely come to want.)

Courtesy LJWorld.com

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