This info graphic demonstrate how the current drought, or any event that affects prices for raw farm commodities, ultimately has a marginal effect on what we pay at the grocery or restaurant. The info graphic is based on data from the USDA Economic Research Service's analysis of retail food prices and the food dollar, or all the factors that affect what we pay for food. (Click to enlarge)

In relation to the current drought, many people ask: What does this mean for food prices? Here we try to provide a response and the necessary context on food price inflation. The info graphic is based on data from the USDA Economic Research Service’s analysis of retail food prices and the food dollar, or all the factors that affect what we pay for food. The graphic helps to demonstrate how the current drought, or any event that affects prices for raw farm commodities, ultimately has a marginal effect on what we pay at the grocery or restaurant. Primarily, the graphic demonstrates two important pieces of information:

1. In the bar chart, food price inflation is expected to be close to the historical average this year and just slightly above that next year. As you can see, recent spikes from 2008 and 2011, especially, outpace current forecasts.

2. In the grocery cart model, you see that raw farm commodity prices (the price of things like a bushel of corn or soybeans) are just one of many factors affecting retail food prices. In fact, commodities make up about 14% of the average retail food purchase, so even if all commodity prices doubled, retail food prices would increase by about 14%. Together, factors such as energy and transportation costs, labor costs, processing and marketing costs all play a much more significant role.

On July 25th, ERS forecast that we will likely see impacts on retail food prices within two months for beef, pork, poultry and dairy. Yet the full effects of the increase in corn prices for packaged and processed foods (cereal, corn flour, etc.) will likely take 10-12 months to move through to retail food prices, and should have little to no effect until that time.

For additional information, see USDA ERS resources: A Revised and Expanded Food Dollar Series A Better Understanding of Our Food Costs (PDF) and Food Price Outlook web page.

A week ago, President Obama released the American Jobs Act, a specific plan to jumpstart our economy and put Americans to work today.  It contains ideas that both parties in Washington have supported.  And yesterday, he laid out a plan that will pay for it – and for other long-term investments we need to stay competitive – while reducing our deficits.

The plan takes a balanced approach.  It looks for savings across government.  And it asks everyone to do their part and pay their fair share so we can live within our means.

For agriculture, the plan focuses on what the President and I believe is one of the most pressing challenges facing producers right now: maintaining a strong safety net and disaster assistance programs that will work for all farmers and ranchers, no matter what they produce or where they produce it. Read more »

Yesterday, USDA Rural Development in the State of Alaska hosted the official signing of a Memorandum of Understanding (MOU) with Rural Alaska Village grant (RAVG) program partners.  The MOU partners, which include the State of Alaska Department of Environmental Conservation (SOA DEC), Alaska Native Tribal Health Consortium (ANTHC), and the Indian Health Service (IHS), are essential in the continued effort to bring safe water and waste systems to rural Alaskan communities. Read more »

Anyone can be healthy “if you eat right and try to get moving,” said a young participant in Move Across Missouri, a program developed in partnership with University of Missouri Extension 4-H and the Missouri Beef Industry Council. Move Across Missouri encourages 4-Hers to increase their physical activity and track the time they spend moving through the Presidential Active Lifestyle Award (PALA), which challenges kids to log 60 minutes of physical activity for five days out of the week for six out of eight weeks. Read more »

The parents were leery about another rental, fearing having to move yet again. Rather serendipitously, the mother saw information on line about USDA Rural Development housing programs. She made a call that changed their lives. As it turned out, the house that they eventually found and qualified for was part of a “green home” renovation in conjunction with other local agencies. The family was able to purchase their home with a loan direct from Rural Development, give their four children a stable home and neighborhood, and the home itself has proven to be so efficient that they are saving monthly on their utility bills.

The family received homebuyer education classes and credit counseling as part of the programs they participated in. The mother said “We are lucky to have found out about you! We have nothing but high praise for the process. Thank you for your dedication to helping families like ours purchase a home.” Read more »