November 15, 2004

Feast your eyes on higher Thanksgiving food prices for 2004

WEST LAFAYETTE, Ind. - One of the most anticipated meals of the year - the Thanksgiving feast with all the trimmings - is right around the corner. But when shoppers begin flooding the supermarkets for food and drink, they will notice higher prices on many of the holiday favorites such as beef, dairy and fruit products.

Corinne Alexander, assistant professor of agricultural economics at Purdue University, said food shoppers will see higher prices on many food products for this year's November and December holiday meals. This rise in costs is a result of higher energy prices and lower production levels.

"Food and beverage prices are increasing at a rate of 3.3 percent this year, compared to last year's rise of 2.5 percent," Alexander said.

She said that retail food prices this fall are rising faster than the prices of other goods and services and that prices of groceries and food eaten away from home are increasing at the same rate.

"Dairy and cattle prices are the major reason for food price increases this year," Alexander said.

The largest price increases are among dairy products, with butter prices up 28 percent and milk up 8 percent from 2003, she said.

Alexander said that the price of beef will depend on the cut. Round roast costs 19 percent more, chuck roast costs 13 percent more, round steak 10 percent more and ground beef only 5 percent more than last year.

"These record high dairy and cattle prices are the result of reduced supplies and continued strong demand, possibly due to the onslaught of high protein diets," Alexander said.

Holiday food shoppers also will see the effects of hurricanes Charley and Frances. Alexander said Florida orange production will be 27 percent lower than last year, tangelo production will be 28 percent lower and grapefruit production as much as 63 percent lower. Due to a shorter supply of holiday fruit this year, shoppers can expect to see higher prices for citrus fruit.

Also, severe storms in California, following the hurricanes in Florida, damaged crops like fresh tomatoes and bell peppers, leading to higher prices for many fresh vegetables, Alexander said.

However, there is some good news for holiday food shoppers.

Egg prices are down by 8 percent from last year, and the price of bread, flour and peanut butter also declined, Alexander said.

There also will be adequate supplies of holiday-favorite turkeys this year. Turkey production is about equal to last year's levels, with Indiana being the seventh-largest turkey producing state.

This year, many stores will feature turkeys at or below cost or offer special prices for frequent shoppers.

"Wholesale prices for turkey are above last year's level, and whether that translates into higher retail prices depends on individual retailer pricing decisions," Alexander said. "The actual price you pay for a turkey will vary depending on whether you purchase whole or turkey parts; frozen or fresh birds; fresh, precooked or complete turkey meals; brand names; and the value of store coupons and price specials."

Alexander said that this year more stores are offering free-range and organic turkeys at premium prices.

To complete the traditional Thanksgiving meal, cranberry supplies will be up 6 percent from last year. While Wisconsin and Washington had slight decreases in cranberry production, Massachusetts and Oregon had an increase. Another holiday favorite, sweet potatoes, will be abundant this season with increased production in North Carolina, Mississippi, Louisiana and California.

"The trend usually shows that an increase in production levels will affect the price of the product by lowing the cost for consumers, which is always good for the holiday budget," Alexander said.

However, Alexander said that this season, consumers will be spending more money to gather and prepare the holiday bounty.

"This year it will cost more to prepare and cook Thanksgiving dinner," she said. "Natural gas prices are 6 percent higher than last fall, while electricity prices are only 1 percent higher. And we will be paying about 9 percent more for gasoline to travel this holiday season."

Writer: Meggie Issler, (765) 494-8402, missler@purdue.edu

Source: Corinne Alexander, (765) 494-4249, cealexan@purdue.edu

Ag Communications: (765) 494-2722; Beth Forbes, forbes@purdue.edu
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