Meat, dairy products projected to cost more in 2013

Expect to spend more money at the grocery store in 2013.

From ground beef to bacon, many red meat products are expected to cost between three and four percent more this year, according to a December 2012 forecast by the U.S. Department of Agriculture.

Central Michigan University economics professor Jason Taylor said food makes up about 13 percent of a family’s budget, and, for lower income families, the figure is even higher.

“Rising food prices are never a good thing. This will eat away at Americans’ standards of living,” he said. “The public will make a lot of noise about how unhappy they are.”

The January 2013 yearly projected beef production is 24.805 million pounds, down 1.390 million pounds from 2011's 26.195 million pounds. Red meat is down 875,000 pounds from 2011.

The U.S. Bureau of Labor Statistics reported the price of lean ground beef rose 22 cents from November 2011 to November 2012 and the price of steak per pound over 35 cents.

The higher protein prices can be attributed to last summer's historic drought, which caused the price of corn, a common animal feed ingredient, to skyrocket.

“The good news is that food is, of course, a broad category, and there is a lot of room for substitution within it,” Taylor said. “If beef prices go up, people may buy more pork or fish. If milk prices go up, however, I doubt we’ll see a mass substitution to soymilk. So, some products are less substitutable than others.”

The USDA projected the average farm price of corn per bushel could cost up to $8 in 2013, up nearly $3 from the 2010/2011 report.

“Corn exports are projected 200 million bushels lower, reflecting the slow pace of sales and shipments to date,” the USDA said.

Taylor said corn prices also increased dramatically following the ethanol craze a couple years ago. With corn being devoted to energy, the price of corn-related food products rose, as well.

“The result was that some very basic staples for many low-income families, such as corn tortillas, cereals and even foods with corn syrup saw large price increases, and this created a lot of angst about how this was making the poor poorer,” he said.

Along with meat and corn, cheese and eggs will likely see a higher price as well.

From December 2011 to November 2012, the U.S. Bureau of Labor Statistics said cheddar cheese rose over $1.30 per pound. Over the same time frame, eggs by the dozen rose by nearly 20 cents.

Caro senior Jordanne Jaskiw said the rise in red meat, cheese and eggs only adds to the price increases she has been experiencing in other aspects of her life.

"The rise we had recently in tuition and the pricing on housing going up has affected myself and a lot of college students, as well," she said. "A rise in food prices will affect the way I spend my money on food and will have me looking at other meal options."

However, Canton junior Rodney Harris said rising food prices are a fact he has accepted.

"I don't buy red meat that often, so if the prices do go up, I'd still buy it," he said. "Everything else is going up, so we just have to get used to it."

Still, Taylor said these prices could be even higher if the United States wasn’t a global economy.

“Many commodities are now bought, sold and priced on a global scale,” he said. “While we may see some prices rise because of last year’s drought, the effects won’t be as damaging as they would have been without global trade.”

While one area of the earth experiences drought, in another part of the world, there is likely excessive moisture, Taylor said. Temperature changes fall into the same category, as well.

“Today, China is seeing an abnormally cold winter, but it is 50 degrees in Mount Pleasant,” he said. “It may have been a bad crop in the United States, but perhaps there was an offsetting good crop in South America, where we increasingly get much of our food, or in Europe or Asia.”


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