If the price of oil doubles, food prices will at least double

At virtually every link in the nation’s food chain, the cost of oil is pushing expenses ever higher.

Retail bills for some food staples have risen at least 20 percent since 2006, and they probably will continue their upward march. A gallon of gasoline could cost $7 within the next two years, some analysts say.

“If you double the price of oil, I would assume that food would at least double, and it might be more because the cost of oil gets magnified in the food chain,” said Milt McGiffen, a vegetable specialist for the University of California cooperative extension in Riverside County.

SCOTT LINNETT / Union-Tribune Nancy Owens Renner of Ocean Beach expanded her backyard garden last winter in an effort to offset rising food and fuel prices. “I am thinking about how to maximize production in my yard,” Renner said.

By the numbers:
Price increases between May 2006 and May of this year:
53% – Eggs
25% – Bread
25% – Rice
19% – Milk
14% – Coffee
– Chicken
Source: Bureau of Labor Statistics

Farmers are paying more money to fill their tractors with diesel for planting and harvesting. They also spend more for fertilizer, pesticides and plastic packaging, most of which are petroleum-based.

When the food is stored and processed, it takes a huge amount of energy, which is linked to the price of fossil fuels as well.

Then, products are shipped using diesel trucks and rail cars that are far costlier to run now than in years past.

The result is bigger and bigger food bills that are causing financial hardship for millions of Americans.

San Diego County is reporting more food-stamp recipients, and local clinics are hearing a growing chorus of concerns from the working poor. There were 107,787 food-stamp recipients in June – a 14.4 percent increase from the same period last year, according to the county Health and Human Services Agency.

“Our waiting rooms are packed with people who are coming to us for medical concerns but also expressing to physicians their hopelessness at … not being able to put food on the table,” said Jenny Jones, a spokeswoman for the Vista Community Clinic network in North County.

Some consumers are trying to offset the fuel-generated increases in their grocery bills with money-saving activities that have dwindled in the modern era. Canning, clipping coupons and cooking at home are some of the strategies. So are gardening, comparing supermarket ads, planning meals for the week and eating local produce when it is freshest and cheapest.

“We are not really reinventing anything. We are just going back to this kind of tried-and-true way that we have always gotten our foods,” said Mel Lions of University Heights, a founder of the San Diego Roots Sustainable Food Project, a nonprofit group that promotes local food production.

JOHN GASTALDO / Union-Tribune Mike Fenton, who once owned a music store in El Cajon, now farms in De Luz, north of Fallbrook. Fenton grows more than 40 types of fruits and vegetables.

Some food and farming experts said people nationwide will have fewer out-of-season produce items because it will cost so much to ship them from overseas. They also foresee a rise in organic farming and efforts to reclaim tracts of once-productive farmland from development.

“There would be a tremendous increase in demand for locally grown products,” said Eric Larson, director of the San Diego County Farm Bureau.

Budgets stretched

Fertilizers, pesticides and fuel for farm equipment account for 14 percent of farm budgets nationally.

Between the second quarter of last year and the same time this year, farmers paid 65 percent more for fertilizer, 5 percent more for pesticides and 46 percent more for fuel, according to the U.S. Department of Agriculture.

The impact of fuel prices goes even deeper, said Dave Kranz, spokesman for the California Farm Bureau in Sacramento. The bulk of food costs are affected by nonfarm factors such as shipping, energy used in processing, and forms of marketing such as the packaging of items.

“It just redounds throughout the entire agricultural economy,” Kranz said.

Rob Neenan, vice president of government affairs for the California League of Food Processors in Sacramento, said the organization’s members use massive amounts of energy. Energy accounts for up to 40 percent of the cost of processing fruits and vegetables, Neenan said, and escalating fuel prices are squeezing profits.

Among other things, California processors are struggling to cover the fuel costs on hundreds of thousands of big-rig shipments each year.

Food prices also are affected by nonfuel factors such as drought and natural disasters, including the recent Midwest floods that have pushed up prices for corn, soybeans and other staples. Severe weather conditions might become more common in coming years if scientists are correct about the effects of global warming.

Consumer reaction

Burgeoning food prices have added to the economic doldrums in San Diego County and nationwide.

At Grangetto’s Farm and Garden Supply, which has four stores in North County, company officials have observed for 56 years how shoppers respond to hard times.

“Traditionally, when the economy starts slowing down, people start … spending more time at home and turning their home into a refuge,” said sales manager Bob Swindell.

In recent months, Swindell has seen a spike in purchases of seeds and garden favorites such as tomato plants. Seed companies nationwide report a similar rise in retail sales.

Nancy Owens Renner of Ocean Beach has planted a backyard garden for years, but she expanded it last winter in response to rising food and fuel prices. In recent weeks, she and her husband have removed some of their lawn to create additional room for growing fruits and vegetables.

“I am thinking about how to maximize production in my yard,” Renner said.

Behavioral changes are happening beyond home gardens.

More families are forming meal plans to help them focus on what to buy at the grocery store, find related coupons and avoid spoilage, said Patti Wooten Swanson, a consumer economics adviser at the University of California cooperative extension office in Kearny Mesa.

These menus also can reduce impulse buys and save gasoline by slashing the number of trips to the store.

Another coping strategy is to reduce meat and dairy consumption and rely more on plant-based diets, including grains, nuts, legumes and in-season fruits and vegetables that often are discounted heavily.

Meat and dairy prices have been hit hard by food-price inflation, in part because feed costs have skyrocketed.

Supermarket shoppers are showing more interest in store brands, and grocers are responding with a wider variety of those items, according to a survey released in May by the Food Marketing Institute, a grocery industry group in Arlington, Va.

The survey also found that 48 percent of respondents said current economic conditions are prompting them to change their shopping patterns. Those shoppers reported comparing prices at different stores, buying more frozen and canned items, and buying fewer “luxury” groceries.

Going local

Rising fuel costs highlight the benefits of locally produced food, said Lions, the co-founder of the San Diego Roots Sustainable Food Project. Over the past 18 months, he has seen an increase in e-mails, phone calls, donations and volunteers.

Such interest extends beyond Lions’ group.

Jeff and Mary Willis launched Edible San Diego, a quarterly magazine that focuses on locally grown foods, in the spring. The publication is part of a national network that started six years ago in Ojai and now includes more than 40 magazines in the United States and Canada.Each year, farmers cultivate about 300,000 acres in San Diego County, mostly in North County. Their harvests fetch an estimated $1.4 billion a year.

Because most of those products are exported, high fuel prices could slow shipments of surplus avocados and oranges from the county to other regions.

Another problem is that farmers typically cannot make immediate changes to meet market demand. For instance, San Diego County agriculture is dominated by nursery and flower crops that require expensive and specialized equipment, which makes it difficult for growers to sacrifice their financial investment and quickly switch to food crops.

Despite potential roadblocks, Lions is convinced that the region can do a much better job of producing its own food. He likens it to the profusion of “victory gardens” during World War II, when Americans converted their yards, rooftops and vacant lots to grow fruit, vegetables and herbs.

“We have paved over some of our most fertile farmland,” Lions said. “But if we were hungry enough, we might consider changing that.”

By Mike Lee
July 15, 2008

Source: The San Diego Union-Tribune

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