The turkey’s hitting the table for the annual Thanksgiving dinner are likely to cost consumers even more in 2011, a Purdue University agricultural economist says.
September’s Consumer Price Index indicates that retail food prices are up 1.4% from September 2009, said Corinne Alexander. “This is what we could consider a fairly modest price increase,” Alexander said. “What I would consider a normal or typical food price increase is somewhere around 2.5%.”
“We’ll have about 2% fewer turkeys this year. As a result, we’re seeing wholesale prices up about 20% compared to last year,” Alexander said. The US Department of Agriculture predicts wholesale prices for eastern market whole turkeys will be between $1 and $1.04 per pound in the fourth quarter of this year, compared with 84 cents per pound last year.
What consumers will actually pay for Thanksgiving dinner depends on where they shop, Alexander said. “Turkey is a favorite loss leader item at grocery stores,” Alexander added. “They might offer a discount on turkey in the hope that when you come to pick up that turkey you also buy all the other items for Thanksgiving.”
US corn yields
A combination of factors is behind rising food prices, Alexander said. Demand is up for corn and soybeans as livestock feed and for use in biofuels, making it more expensive for farmers to raise livestock. US corn yields are lower than late-season estimates, creating additional supply and demand shortages. And a wheat shortage brought on by a Russian drought and other market forces is taxing supplies of that cereal grain.
Livestock and dairy producers are responding to the feed cost increases by reducing herd sizes or delaying herd expansion, leading to tighter meat supplies, Alexander said. Because of the weak economy and lower consumer spending, supermarkets and restaurants have been hesitant to pass their higher costs onto consumers, Alexander said. There will come a point when retail outlets will have no choice – likely within the next 6 to 12 months, she said.