WSJ Article - Food Prices Increase - Passed on to Shoppers

[castocreations]

Okay...so I love reading the WSJ but this article totally depressed me. It's a subscription only service so I'm going to post as much of the article as I can here (at least the interesting points). Any bold or color text is my own highlighting. :)

I'm already thinking about how I can fit more meat into our freezers!!!

Food Giants Race to Pass
Rising Costs to Shoppers

By SCOTT KILMAN
August 8, 2008; Page A1

Companies throughout the food chain are changing the way they do business in response to soaring grain costs, and consumers are likely to bear the brunt in the form of rising food prices.


Farmers are making the broadest cuts to their livestock herds in decades, meaning meat at the supermarket will likely cost more in coming years. Middlemen are trying to shorten the duration of supply contracts to 90 days from one year so they can pass on higher costs more quickly. And food brands are shrinking the contents of their packages, from ice-cream cartons to beverage containers.



Everyone's adjusting," Brenda C. Barnes, chief executive of Sara Lee Corp., said Thursday after the company reported a $695 million loss for the quarter ended June 28. That included an $850 million after-tax charge, mostly for writing down the value of bakery businesses hit by soaring wheat costs.


The Downers Grove, Ill., food giant, whose stable includes bread, cheesecake and hot dogs, is winnowing its product lineup and reducing the amount of meat in its Hillshire Farm deli packages, among other steps. Sara Lee expects its commodity and energy costs to climb an additional $500 million in its fiscal year ending June 2009, following a $350 million increase in fiscal 2008.


Nestlé SA, which on Thursday reported a strong profit for the first half of the year, has raised its prices on thousands of products in recent months, passing at least some of its higher costs on to consumers.


....


Many food processors, meanwhile, are slumping because they're having a hard time passing along their costs. Pork giant Smithfield Foods Inc.'s stock has slipped 10% since August 2006, while the stock of meat rival Tyson Foods Inc. has lost 24% of its value over the past year. The stock of dairy-products giant Dean Foods Co. dropped 5.7% Wednesday despite reporting stronger second-quarter earnings because it warned of "continued volatility and inflationary pressure."


"I think we are in the early stages of this," said Paul D. Ridder, chief financial officer of Tasty Baking Co., a Philadelphia maker of snack cakes, which raised prices of its single-serving items by 8% during its second quarter ended June 28.


During the first six months of 2008, the consumer-price index for food compiled by the U.S. Bureau of Labor Statistics rose at a seasonally adjusted annualized rate of 6.8%, with retail prices of breakfast cereal, bakery products and cooking oil among the fastest climbers. That six-month inflation rate is far higher than anything U.S. consumers have had to stomach in 18 years.


In another measure, the cost of the groceries that the federal government suggests middle-class families buy to have healthy diets rose 8.6% in June compared with the same month a year earlier.


The U.S. Department of Agriculture sees food prices climbing 4.5% to 5.5% this year and 4% to 5% in 2009. Even under this more conservative forecast, the average family of four would see its annual food costs hit $9,800 in 2009, up about $1,200 since 2006. [ed- Wait...how many (non-coupon) families of 4 live on $100 a month for food???!!!???]


"American consumers should brace themselves for sticker shock in the meat case over the next 12 months," Pilgrim's Pride Chief Executive Clint Rivers said last week during a conference call with analysts.


Many food manufacturers are retooling assembly lines to produce smaller versions of everything from cereal boxes and ice-cream cartons to mayonnaise jars, margarine tubs and cheese packages. By giving consumers less for roughly the same price, food executives hope to keep consumers from moving to cheaper brands.


Consider General Mills Inc.'s Cheerios cereal. When the American Farm Bureau Federation sent members into supermarkets to conduct its second-quarter food-price survey, the 10-ounce box of Cheerios had vanished. So the volunteer shoppers turned to the box nearest in size, 8.9 ounces.


The smaller box cost $2.98 on average, up from $2.86 charged by the stores for the bigger box a year earlier. On a per-ounce basis, the retail price of Cheerios jumped 17% to 33.5 cents in the second quarter from 28.6 cents a year earlier.

I am SO blessed to have found HCW!!! I got more than a pound of ground chicken breast for $1.99 on Wednesday. That kind of deal is not something I ever looked for before.

I think it's time to clean out our freezer to make room for good deals on meat.

[pejkug3]

Bummer - but we knew it was coming....

[castocreations]

On a more positive note...a cute little article/video about getting the most bang for your buck with food. Less than 7 minutes long. Dr Manny cracks me up. :)

[Mothernature]

Come over to the vegetarian side. $1.50 for a carton of Tofu and you won't clog your arteries with it!

[angielee]

We are eating less meat. I cant find as many good deals on it anymore, not even pork! More beans for us, God help me with my husband!

[castocreations]

Come over to the vegetarian side. $1.50 for a carton of Tofu and you won't clog your arteries with it!

*giggle*

I actually don't eat a *ton* of meat. I do love chicken though. And hot dogs. Do they qualify as "meat"? lol

Thankfully we have a good friend who owns his own butcher shop and has a better price on meat than Walmart. And it's amazing. But still can be expensive. *sigh*

Plus...even if you are a veggie eater you'll be affected by price increases. It all trickles down. *sigh* I wish it wouldn't. :hectic1:

Lots of beans in our future too!

[Mothernature]

This is the typical omnivore response. If prepared properly, it tastes as well as meat. Look at Boca or Morningstar.

Sure prices trickle down. With the organic booklets and the weekly inserts, I am paying very little for food. This week I am paying $.70 for a large quantity of fresh pizza dough and 12 lemons.

[Janshops]

OP I am like you I am so glad that I found HCW and things like the rising prices are not hurting as much as it would have if I had not stockpiled and used these coupons and followed all your leads.
I want to express my gratitude to everyone for sharing their knowledge the deals and ideas.
OP I am also concerned by the rising cost of everything and it appears that we have only experienced the tip of the ice burg.
But we will be far better off than our counterparts that refuse to take the time to learn and do the deals that we are doing and sharing that will carry our family though.
I have several at work that I have tried to show how to do the deals that I am doing that want the deals but want them handed to them on a silver platter complete with matching coupons laid out in envelopes(which I have even done so that they can get the feel of it).

When I say Thanks HCW that is you everyone who is on this site and shares.

[castocreations]

This is the typical omnivore response. If prepared properly, it tastes as well as meat. Look at Boca or Morningstar.

Sure prices trickle down. With the organic booklets and the weekly inserts, I am paying very little for food. This week I am paying $.70 for a large quantity of fresh pizza dough and 12 lemons.

I AM a typical omnivore. Love it. *grin*