Big Drop in Food Prices Expected to Last Several Weeks
After a spate of flood, freeze and drought that drove food prices sky high earlier this year, U.S. consumers are finally getting a break in the grocery store.
A dramatic slide in food prices that began in July is expected to last into September, analysts said Friday, giving shoppers a much-needed rebate. The damage wrought by bad weather this spring has been repaired by more favorable conditions.
Agricultural analysts said good weather across the country was largely responsible for the 0.8% drop in July wholesale food prices, the biggest monthly slide in four years. Prices of highly seasonal crops, such as tomatoes, snap beans and lettuce, plunged by more than 30%, the U.S. Labor Department said.
The decline in food prices was a major factor behind the overall drop in the government’s producer price index for July. The index tracks wholesale prices and is a closely watched measure of inflation. However, most economists disregard monthly changes in food prices because the cost of food is more dependent on weather than on the economy.
The slide in wholesale food prices, of course, is significant to consumers who are enjoying unusually low prices for some fruits and vegetables. Last week, some grocers sold cantaloupes for 33 cents each, Vons Vice President Dick Spezzano said. “That’s the lowest price I’ve seen since 1978,” he said.
Spezzano said that tomato prices are down 60% from mid-spring, and the price of plums has dropped by one-third.
The big price drop is bad news for California farmers, who grow about half the nation’s fruit and vegetables and lead in production of certain low-priced lettuce and tomatoes. Dave Moore, president of the Western Growers Assn. in Irvine, said many “vegetable growers are not covering their costs.” If prices continue to fall, he said, “they’ll be a lot of hurt among farmers.”
The plunge in fruit and vegetable prices returns to consumers some of the money spent on fresh produce earlier this year. In April, vegetable prices soared 34% as unseasonably warm weather in Florida hurt tomato and sweet corn crops. Before that, concerns about a drought in California also put upward pressure on produce prices, agricultural analysts said.
The Christmas freeze that swept through California also caused fruit and vegetable prices to jump early in the year. Record low temperatures wiped out most of the navel orange crop and damaged early plantings of other foods. Broccoli, which now sells for 59 cents a pound in many Southland markets, sold for as much as $1.69 a pound in March.
Catherine Greene, an economist with the U.S. Department of Agriculture, said an unusually warm spring in the East led to an early and abundant harvest of tomatoes, snap beans, lettuce and other crops. She said additionally that fruit and vegetable farmers were planting slightly more land this year than last year.
Greene and other agricultural analysts said, however, there were some recent signs that prices may be firming. Moore anticipated prices would recover in early fall, when the growing season in the East ends.
In addition, a lack of rain in the Midwest “is going to have an impact on vegetables,” said Scott Rawlins of the American Farm Bureau.
Food, Affordable Food!
Wholesale prices fell in July for the first time this year, led by the biggest one-month decline in food costs since early 1987. Cool weather early in the season caused shortages and high prices for some vegetables. As the weather improved, so did food prices. Here are the shipping prices--the amounts supermarkets pay to their primary suppliers--for a variety of vegetables in California.
Price week Price week Vegetables of July 1 of July 31 % drop Large and extra large $8 to $9 $4 to $5 as much as 56% tomatoes, 25 lb. carton Green bell peppers, $17 to $18 $8 to $10 as much as %56 1 1/9 bushel carton Cauliflower, carton of $4 to $5 $3 to $5 as much as %40 12 heads Celery, carton of $9 to $10 $3 to $4 as much as %70 12 heads Sweet yellow corn, $12 to $13 $6 to $8 as much as %54 carton of 5 dozen ears
Source: Federal State Market News Service, California Department of Food and Agriculture. Producer Price Index For finished goods Seasonally adjusted change from prior month July ‘90: +0.3% June ‘91: -0.3% July ‘91: -0.2% Source: Labor Department, Associated Press
