November 12, 2009

Ag economist: Thanksgiving leftovers include money in pocket

Heading into the holiday, retail food prices generally are lower than one year ago, Corinne Alexander said.

"As of September, the Consumer Price Index reported that grocery store prices are, on average, 2.5 percent lower than they were at this time last year," she said. "This is wonderful news for grocery store shoppers."

The lower food prices are the result of a recession-driven drop in commodity and crude oil prices, Alexander said. As wholesale food costs have come down, so, too, have retail prices, she said.

The iconic Thanksgiving turkey should be a bargain.

"There will be adequate supplies," Alexander said. "This year the United States Department of Agriculture is predicting that the wholesale prices of whole turkeys will be 81 to 85 cents per pound. That's compared to 87 cents per pound last year.

"Many grocery stores treat turkey as a loss leader, meaning they will give you a discount on turkey - or even sell it below cost - in order to get you into the grocery store to buy the turkey, and, hopefully, the rest of the items for your Thanksgiving meal, as well."

The actual price consumers will pay for turkey will depend on a host of factors, such as whether they're buying whole or turkey parts, a frozen or fresh bird and a brand name or off-brand fowl, Alexander said.

Cranberries should be plentiful, with the potato market being a mixed bag of good and bad news.

"Cranberry producers are expecting their second largest crop on record. And whenever we talk about record crops or near-record crops, we're talking about downward price pressure," she said.

"When it comes to sweet potatoes, the USDA reports that prices are up 10 percent from a year ago. That's largely due to tighter supplies. Hurricane Gustav hit Louisiana, which is one of our major sweet potato growing states, and so those supplies are down. Fortunately, Gustav did not hit North Carolina, which is another major sweet potato state.

"A lot of us also like to have mashed potatoes for Thanksgiving, and for that we look at white potato prices. Those are down 10 percent this fall from where they were last year, due to both larger supplies and reduced demand."

Cooking the holiday meal or traveling to spend Thanksgiving with family should be easier on the wallet, too. Alexander said gasoline prices and electricity rates are at about the same level as this time last year, while natural gas costs are around 25 percent lower than November 2008.

Regardless of how much consumers spend this Thanksgiving, Americans can be thankful for an inexpensive bounty, Alexander said.

"Americans enjoy a wonderful, high-quality food supply that for the average American family costs less than 10 percent of their take-home income," she said. "That's much lower than most countries around the world.

"For our neighbors to the south in Mexico, the average family there spends about 25 percent of their take-home income on food. And for some of the poorest countries in the world, the average families in those countries are spending as much as 60 percent of their take-home income on food. Americans are extremely fortunate to eat well for not very much money."

Although Americans spend little of their income on food, the recession has made it difficult for some families this Thanksgiving, Alexander said.

"There are many who find their budgets tightened by unemployment, minimal wage increases and continued erosion of fixed incomes by inflation," she said. "For these, any food price rise is significant. We should remember those who are less fortunate and share our food bounty."

Writer: Steve Leer, 765-494-8415, sleer@purdue.edu

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

Ag Communications: (765) 494-8415;
Steve Leer, sleer@purdue.edu
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