Harsh Winter Sends Produce Prices Higher
But beef and milk prices remain stable despite freeze
You can thank this year's headstrong winter for the extra money you're paying at the grocery store.
The freezes and floods that began earlier than normal show no sign of letting up in key food-producing regions, and the effect is becoming evident at the produce rack.
Almost overnight, wholesale prices are shooting up 30 percent on some seasonally sensitive items. Peppers, okra, and squash have been hardest hit. As much as 80 percent of these crops was wiped out in the recent chill in south Florida.
Shoppers are also shelling out more for tomatoes, corn, lettuce, and strawberries. Prices for orange juice futures jumped earlier this week with the release of reports detailing the damage to Florida's citrus crop. Some $70 million to $300 million worth of the citrus crop was ruined.
The higher prices aren't going unnoticed by consumers. "They say, 'what? Broccoli is up up a dollar a bunch from the day before? Whoa!,'" says Mike Mulier, operator of Mulier's Market just outside Detroit.
Mr. Mulier's grandfather built the grocery store 60 years ago, and the family still prides itself on selling only fresh meats and vegetables that arrive each day.
"A 28-pound crate of green beans now costs $37.50. The day before it was $27.50," says Mulier. "I think when they see the higher prices, what they do is pass on the vegetables. Then they go to a competitor and realize it's not just us that has higher prices."
While the short-term price increases hurt, families shouldn't feel the effect on their food budgets too long.
"I think the bottom line on fresh vegetable prices is that we know we're going to have some higher prices, and possibly some short supplies on some of them," says Annette Clauson, an economist with the US Department of Agriculture. "But it's not something that will affect the overall CPI to any effect." The Consumer Price Index is the government's gauge of consumer prices on a wide range of items.
Ms. Clauson isn't worried about long-term prices because plenty of products are available on commodity markets. In many cases, prices of basic staples are going down. Gary Veinberg, a retail food-chain analyst for Merrill Lynch & Co. in New York, agrees.
"If Florida orange juice goes up, you can get it from Brazil," he says. "There is a lot of product in the world."
Despite Florida's misfortunes, citrus prices should remain stable since a bumper crop was hanging in orchards before the freeze. The portion of the crop that survived is at least equal to that of last year. Moreover, citrus crops in Arizona and Texas are flourishing.
In the short term, however, the weather continues to wreak havoc.
In the Northwest and California, the wettest season in history is making fields soggy, and keeping farmers from harvesting crops like cauliflower. In Florida, as the state requests disaster aid for January losses, as many as 20,000 migrant workers are without work.
Growers are also bitter about the effects of the freeze and the government's lack of help in predicting it. For the first time in 40 years, the National Weather Service did not provide agricultural weather forecasts. Congress axed the program to save $3 million in federal dollars.
The program used to give farmers advance notice of imminent freezes and provide hour-by-hour temperatures. Growers say they could have saved much of the lost citrus if they had more lead time to set out smudge pots and take other measures.
Across the country, other producers are also hurting. The recent cold snap in the Rocky Mountain West killed tens of thousands of cattle.
"If you want to talk extremes, during the major part of the storm, it was nothing to have an 80-degrees-below-zero wind chill and blowing snow," says Wade Moser, vice president of the Stockmen's Association in Bismarck, N.D.
But the Dakota deep freeze did not affect the big-feed-lot states of Oklahoma, Kansas, and Texas as badly, so beef prices nationally have remained stable and in some areas have fallen in recent months.
In Nebraska, some dairy farmers claim this is the worst winter in 25 years and are feeding their livestock 40 percent more than normal to help keep the animals warm.
This regional misfortune shouldn't hurt the rest of the country. Milk prices are down 25 percent from last year's highs and are expected to dip even lower.