The Nation's Food Basket: Prices Soar

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The Nation's Food Basket: Prices Soar

Every shopper recognizes the alarming rise in food prices — so have manufacturers and retailers.

While U.S. food prices are projected to climb 7- to 9 percent this year, compared to a gain of 4 percent in 2007, soaring prices on the basics — milk, eggs, butter, and meat — are driving up the cost of everything made with these core ingredients and grocers are feeling the pinch along the aisles and in their foodservice operations.

Many analysts expect food prices to maintain their upward trajectory, propelled by rising energy costs and the devastating Midwest floods that wiped out many crops for this year. Commodity foods, such as corn, soybeans and wheat, have nearly tripled in price in the past two years and continue to rise. Egg prices are up 60 percent from a year ago, pasta products have risen 30 percent, and fruits and vegetables are up 20 percent, according to the Labor Department.

Value pricing and store brands will help alleviate the burdensome cost to consumers while building brand loyalty with retailers. Research shows that the top private label items are eggs, milk, and cheese products.

To help stretch budgets and still deliver fresh foods to consumers, Wal-Mart, the nation's largest purchaser of farm products, is broadening its Buy Local program to deliver farm-fresh food to shoppers. The initiative, rolled out to stores years ago to develop a local flavor to the retail giant's expansive chain, now takes on new meaning. For Wal-Mart, it develops better relationships with local farmers across the country, negotiates the best price for its stores, provides farmers with a ready outlet for products, and reduces fuel costs and emissions because it is not trucking merchandise over long distances.

Pennsylvania-based Giant Food, a long-time adherent to the buy local philosophy, was recognized with Pennsylvania's first-ever PA Preferred Retailer of the Year award in this year. The program requires participants to source at least 60 percent of their products in Pennsylvania. Like other state-run programs, PA Preferred's origins are tied to fresh produce, but its impact now extends to an array of shelf-stable foods, beverages, condiments, and nonfoods.