Senate Panel Sees No Proof of Drought Price Gouging

Federal investigators said today some food prices have risen faster than warranted by the drought but a Senate chairman said there’s no proof so far of significant price gouging.

“Some price increases do appear higher than warranted by the drought alone,” Sen. Patrick J. Leahy (D-Vt.) told a hearing of his Senate Agriculture Committee. He said the higher levels were “most notably in wheat-based food products, such as pasta and bread, and in some meats.”

“But in general there do not seem to have been excessive price increases across a broad range of products that use the drought as an excuse,” he said.

The hearing was held to unveil a report from the General Accounting Office on food price increases between July and August. The report was requested by Leahy and Rep. Byron L. Dorgan (D-N.D.) in July amid speculation that the food industry was seizing on the drought to hike prices.

A GAO official, John Harman, told the committee some price increases found by the congressional investigative agency could not be explained by the drought. He pointed to a 6% jump in pasta prices between the July and August checks that the agency made.

A rise of 3.4% would be warranted by the impact of the drought on durum wheat used to make pasta, he said. He added that cattle prices dropped as a result of the drought but that was not reflected in the cost of beef.

Just why there were some increases was unclear, he said.

It may have been because “prices of packaging of food products went up significantly this year,” GAO aide Mary Kenney told the panel.

“There could have been some labor cost increases . . . we don’t know if there were,” Harman said.

“Conclusive evidence of price gouging has not been found but there are some indications out there” that suggest it could materialize in the future, Sen. Tom Harkin (D-Iowa) told the hearing packed with lobbyists from the nation’s multibillion-dollar food industry.

“My advice to consumers is to be comparative shoppers,” he said.

The study showed that the price of ground beef has increased 3%, while the price that livestock producers get for cattle actually has dropped 11% since April.

Fruit prices rose an average of 12%, while bread prices increased 4%, according to the GAO.