Consumers are paying more for common grocery items compared to last year, but less over the past two years, according to Indiana Farm Bureau’s recent spring market basket survey results.
Not only have those grocery costs impacted consumers’ pocketbooks, but also the bottom lines for producers such as dairy.
Fluctuations
The survey results showed that the cost of a basket of 16 common items, which includes staples such as milk, ground chuck, boneless chicken breasts, white bread and eggs, increased from $45.99 to $46.72 from 2017 to this year, a 2 percent increase. Ten of the items increased in price while six decreased.
Items reflecting the greatest one-year-increase, according to the survey, were:
- Vegetable oil (32 ounces), $1.79 to $2.43, 36 percent change
- Grade A eggs (dozen), $1.22 to $1.62, 33 percent change
- Boneless chicken breast (1 pound), $2.59 to $3.28, 27 percent change
“A surge in egg exports combined with relatively flat production led to the strong rise in retail egg prices, John Newton, American Farm Bureau Federation’s director of market intelligence, said in a news release.
Items reflecting the greatest one-year decrease, according to the survey, were:
- Red delicious apples, (1 pound), $1.79 to $1.45, 19 percent change
- Sliced deli ham (1 pound), $6.02 to $5.19, 14 percent change
- Bacon (1 pound), $4.68 to $4.23, 10 percent change
Over the past two years, however, the cost of the 16-item basket has decreased 11 percent, from $52.61 in 2016 to $46.72 this year, according to the survey results. Fourteen of the basket items dropped in price over the period.
Only bagged American salad ($2.06 in 2016 to $2.36 now, 15 percent change) and a pound of shredded mild cheddar cheese ($4.12 in 2016 to $4.30 now, 4 percent) increased in price over the past two years.
The items reflecting the greatest two-year decrease in price, according to the survey, were:
- Cheerios (8- to 9-ounce box), $3.15 in 2016 to $2.10 this year, 33 percent change
- Grade A eggs (dozen), $2.26 to $1.62, 28 percent change
- Whole milk (1 gallon), $2.78 to $2.28), 22 percent change
- Red delicious apples (1 pound) $1.87 to $1.45, 22 percent change
- Orange juice (half gallon), $3.62 to $2.84, 22 percent change
Cost factors
Multiple factors affect the prices of groceries, including farm prices, said Purdue University agricultural economist Christoper Hurt.
“As an example, in 2014 avian influenza reduced egg production by about 8 percent. This caused a sharp increase in the farm price of eggs. Those high prices were quickly passed on to consumer,” Hurt said.
Farm prices also include the costs to produce the items, which could include feed for livestock. Non-farm factors that can influence prices, Hurt said, include storage, processing, packaging, labor, transportation and advertising.
Consumer tastes also affect grocery prices, Hurt said, particularly when they choose to buy less of one item and more of others.
“Consumers have been buying a wider variety of food attributes over the past 20 years or so. Some of those attributes you will quickly recognize: brown eggs, cage free eggs, range free, grass fed, gestation crate-free pork, gluten free, non-GMO, natural, organic, antibiotic free, locally produced, sustainably produced, and the list goes on,” Hurt said.
The changes in preferences make farmers adopt new practices as they work to meet all the needs of consumers. Organic is a different production process that requires major changes in farm practices, Hurt added.
“Agriculture is big enough to provide whatever consumers want,” Hurt said. “So increased communications between consumers and farmers, increased knowledge and information are valuable to both farmers and consumers.”
Dairy producers impacted
Dairy farmers in Indiana have been impacted in multiple ways, Indiana Farm Bureau said, such as a surplus of milk production, a decrease in milk consumption and increased competition in milk processing.
That’s contributed to the 22-percent drop in the retail price of a gallon of whole milk, which is good for consumers but hurts dairy farmers’ profitability, Indiana Farm Bureau said.
On top of that, Dean Foods informed 100 dairy farms — 27 of which are in Indiana — that they would not be buying milk from them starting June 1.
“The dairy industry already had a lot on its plate in dealing with low milk prices. Now, unfortunately, these Indiana farmers have the added task of finding a new buyer,” Indiana Farm Bureau President Randy Korn said in a news release.
