May 29, 2011

Rising food prices hard to swallow

Shoppers, restaurateurs and pantries try to cope as the cost of food consumes more of their budgets.

By Beth Quimby
Staff Writer

FREEPORT - Jody Bennett said about the only food she buys at a supermarket these days is coffee.

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Caroline Loder, newly arrived from Germany and carrying daughter Savanah, 1, at the Bow Street Market in Freeport, says she is reeling from the cost of feeding her family of five an organic vegetarian diet. Her bill soared from $100 a week in Germany to $300 in Maine.

Gordon Chibroski/Staff Photographer

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After two years of the lowest food inflation rates since the 1960s, food prices are headed up again. The U.S. Department of Agriculture reported that nationally, overall food prices jumped 3.9 percent from April 2010 to last month.

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The Freeport resident is raising her own beef and growing her own vegetables, instead of purchasing such items in the store.

"I've actually started canning," said Bennett.

Bennett, who stopped for coffee at the newly expanded Bow Street Market in Freeport on Friday, is among those shoppers who are changing their buying habits to cope with a surge in grocery prices.

"I might buy three bananas instead of a whole bunch," said Sue Hughes of North Yarmouth.

Gone are the days of deflation, when prices for some grocery items actually went down, said Adam Nappi, owner of Bow Street Market.

"Pricing is tricky," said Nappi.

After two years of the lowest food inflation rates since the 1960s, food prices are headed up again. The U.S. Department of Agriculture reported that nationally, overall food prices jumped 3.9 percent from April 2010 to last month.

Coffee prices have soared nearly 14 percent in the past year. Beef and pork prices shot up 10.4 percent. Dairy prices are up 6.3 percent, eggs up 4.8 percent and fresh vegetables up 4.5 percent.

Those increases make other food categories look like a bargain. Poultry is up a mere 2.3 percent, fresh fruit up 1.6 percent, and carbonated drink prices were up less than a percent.

Rising food costs have triggered a flood of price increase announcements by food companies. McDonald's, Hershey's and Starbucks have all announced price hikes in recent weeks. Nestle Waters North America Inc., owner of Maine-based Poland Spring, has joined the parade, raising prices 10 percent last month, its first increase in a decade. Nestle cited the rising cost of plastic.

The government is now projecting grocery store food prices will rise 3.5 percent to 4.5 percent in 2011, while restaurant food will rise 3 percent to 5 percent.

Bad weather, rising global demand and political turmoil in the Middle East that has triggered fuel increases are to blame, say economists.

"There is a shift particularly in developing countries toward an American-European diet, which has pulled up the cost of things like beef," said Charles Colgan, an economist at the Maine Center for Business and Economic Research at the University of Southern Maine.

Colgan said some argue that ethanol subsidies have pushed up the price of corn, which in turn raises the cost of corn-fed beef and pork and foods made with corn syrup and other corn products.

Meanwhile, heat and drought heavily damaged the wheat crop in Russia, France and Australia. Colgan said it appears bad weather is increasing.

"There are a lot more factors pushing prices up than pushing prices down, " said Colgan.

Restaurants, bakeries and food pantries say they are scrambling to keep up.

Geoff Titherington, owner of the Bonanza Steakhouse in Sanford, said he was able to keep prices the same for the past five years, but finally had to increase many entrees by a dollar after the chain's meat packers raised their own prices last month. He said beef producers are reducing their herds due to the high price of corn feed. In the short term, that has increased the supply of beef and helped keep prices a bit lower, Titherington said.

"The downside is that those producers are not raising many calves, and that will cause prices to climb even higher in the future," he said.

Harding Lee Smith, chef and owner of The Corner Room, The Front Room and The Grill Room restaurants in Portland, said he has raised prices here and there but it's a balancing act with his customers' incomes.

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