Consumers who are braced for higher food prices because of the summer's drought should breathe a little easier, says an Agriculture Department economist.
Fears that the total at the checkout counter is going to shoot upward because of farmers' problems are largely based on erroneous assumptions about the way food prices are set and on exaggerations of the drought's effects on food supplies, says Ralph Parlett of the department's Economic Research Service."Although grain and soybean stocks are not as large as they were in some prior drought years, we are in no foreseeable danger of running out of food," Parlett says in an article in the department's Farmline magazine.
"Supplies of grains are more than ample to meet demand," Parlett said. Winter wheat, used for baking bread, was harvested before the drought struck. Meat and poultry production is expected to hit record levels, and most fruit and vegetable crops will be undamaged because they are grown under irrigation, he said.
The bottom line: overall food prices, which had previously been forecast to rise 2 to 4 percent this year, now are expected to go up 3 to 5 percent - a one-point boost because of the dry weather.
There is concern, however, that some middlemen in the food chain might seek to exploit the dry conditions as an excuse for higher prices. At least two members of Congress - Rep. Byron Dorgan, D-N.D., and Sen. Patrick Leahy, D-Vt., chairman of the Senate Agriculture Committee - have asked the General Accounting Office to monitor food prices for evidence of gouging.
"We know that in previous times, gouging has occurred," Dorgan said. The GAO, Congress' investigative arm, will track food prices at the farm, the wholesale and retail levels for a marketbasket that includes white bread, choice beef, chicken, bacon, milk, fruit, vegetables, ground beef, chuck roast, spaghetti and macaroni.
"People vote with their food dollars," said Dorgan. "If we find price gouging, the ability to spotlight that . . . will persuade consumers to move their dollars toward other brands or other commodities."
Parlett said most affected by price increases will be pasta products, which are made from drought-damaged durum wheat, vegetable oils, oat-based cereals and a few fruits and vegetables such as sweet corn, peas, dry beans and tart cherries.
Fresh fruit and vegetable supplies and quality have been affected in some non-irrigated drought areas where food stores look to local farmers to fill their produce departments during the growing season. But most produce effects were felt in areas where vegetables are grown for canning, Parlett said.
Fears that drought translates into sharply higher food prices are founded on some false assumptions, the economist said.
If shortages do result in higher commodity prices for farmers, the effect is greatly diluted by the time the product reaches the consumer.