Record-Journal
07-23-2007, 08:16 PM
With more and more foods changing direction from mouths to fuel tanks, and the high cost of transportation, consumers are seeing record grocery prices, and the trend seems likely to continue.
In a push to develop an alternative to oil, ethanol, which is made primarily from corn, is being produced in large quantities. This in turn has driven corn prices up considerably.
"Corn impacts a lot of the food chain," said Mitchell Corwin, equity analyst with Morningstar, an independent investment research firm.
Corn is used to feed cows and chickens, so it drives meat and dairy prices up. It's also incorporated into a lot of cereals, and things like the corn syrup in soda. But the ripple effect of farmers moving to corn to take advantage of high prices is having a larger impact on the market.
"Another thing is that farmers are planting more corn to help meet the demand and they're planting less soybeans, so it's driving up the price of those as well," Corwin said.
"There's a shift to higher prices because of how this has impacted the entire food chain."
According to the consumer price index, food prices as a whole were up a half-percent in June, after rising 0.3 percent in May.
"You see a large increase in your dairy products," said Southington-based Tops Market co-owner Betsy Tooker. "Poultry creeps up there as well."
Tooker has not, however, seen a dropoff in patronage from price-conscious shoppers going to low-cost stores like Wal-Mart, she said.
Different grocery stores do have significant differences when it comes to food prices, however.
A survey of six local stores and a comparison of seven randomly selected items showed that certain stores offer quite a bit of savings.
The stores surveyed were Everybody's Food Market in Cheshire, the Wal-Mart Supercenter in Wallingford, ShopRite and Stop & Shop supermarkets in Meriden, and Tops Market and Price Chopper in Southington. Both Meriden Stop & Shop locations had the same prices on all surveyed items.
For four of the seven items, Wal-Mart's prices were cheapest, and it had the second-lowest price on two of the remaining product, making it the cheapest overall. Stop & Shop came in second with two lowest item prices and two second-lowest prices. ShopRite was third with two of the lowest item prices. There was a three-way tie for lowest price on bananas.
The most expensive retailer was Everybody's, with four of the highest prices. The second most expensive was Price Chopper, with three of the highest prices.
Debra Lowe is happy with the prices at the Broad Street branch of Stop & Shop in Meriden, she said while shopping Monday. Lowe isn't overly concerned about rising prices, or that she might be able to shave a few cents elsewhere.
"Some things are (rising) and some things are staying the same," she said.
Though she has a membership to BJs Wholesale Club, a retailer that specializes in bulk discounted goods, she said that buying in bulk isn't always convenient, so she prefers the local grocery store.
She says she doesn't frequent Wal-Mart either.
Ethanol production is only going to pick up in the coming years, Corwin said, meaning that prices will continue to rise, and they may not come down as long as ethanol is being produced with corn.
"Food prices are rising," he said. "Historically, food prices may have been volatile, but what's happening right now is really a shift that's elevating food prices to a permanently higher plateau. It's a supply and demand issue. As long as we're producing more ethanol, we're going to have a higher demand for food."
In a push to develop an alternative to oil, ethanol, which is made primarily from corn, is being produced in large quantities. This in turn has driven corn prices up considerably.
"Corn impacts a lot of the food chain," said Mitchell Corwin, equity analyst with Morningstar, an independent investment research firm.
Corn is used to feed cows and chickens, so it drives meat and dairy prices up. It's also incorporated into a lot of cereals, and things like the corn syrup in soda. But the ripple effect of farmers moving to corn to take advantage of high prices is having a larger impact on the market.
"Another thing is that farmers are planting more corn to help meet the demand and they're planting less soybeans, so it's driving up the price of those as well," Corwin said.
"There's a shift to higher prices because of how this has impacted the entire food chain."
According to the consumer price index, food prices as a whole were up a half-percent in June, after rising 0.3 percent in May.
"You see a large increase in your dairy products," said Southington-based Tops Market co-owner Betsy Tooker. "Poultry creeps up there as well."
Tooker has not, however, seen a dropoff in patronage from price-conscious shoppers going to low-cost stores like Wal-Mart, she said.
Different grocery stores do have significant differences when it comes to food prices, however.
A survey of six local stores and a comparison of seven randomly selected items showed that certain stores offer quite a bit of savings.
The stores surveyed were Everybody's Food Market in Cheshire, the Wal-Mart Supercenter in Wallingford, ShopRite and Stop & Shop supermarkets in Meriden, and Tops Market and Price Chopper in Southington. Both Meriden Stop & Shop locations had the same prices on all surveyed items.
For four of the seven items, Wal-Mart's prices were cheapest, and it had the second-lowest price on two of the remaining product, making it the cheapest overall. Stop & Shop came in second with two lowest item prices and two second-lowest prices. ShopRite was third with two of the lowest item prices. There was a three-way tie for lowest price on bananas.
The most expensive retailer was Everybody's, with four of the highest prices. The second most expensive was Price Chopper, with three of the highest prices.
Debra Lowe is happy with the prices at the Broad Street branch of Stop & Shop in Meriden, she said while shopping Monday. Lowe isn't overly concerned about rising prices, or that she might be able to shave a few cents elsewhere.
"Some things are (rising) and some things are staying the same," she said.
Though she has a membership to BJs Wholesale Club, a retailer that specializes in bulk discounted goods, she said that buying in bulk isn't always convenient, so she prefers the local grocery store.
She says she doesn't frequent Wal-Mart either.
Ethanol production is only going to pick up in the coming years, Corwin said, meaning that prices will continue to rise, and they may not come down as long as ethanol is being produced with corn.
"Food prices are rising," he said. "Historically, food prices may have been volatile, but what's happening right now is really a shift that's elevating food prices to a permanently higher plateau. It's a supply and demand issue. As long as we're producing more ethanol, we're going to have a higher demand for food."