Tariff Threats No Longer Just Bluster

Economic Tidbits 12.18.17

Last week marked a new extreme in the trade tensions between the U.S. and China as President Trump moved forward with tariffs on $34 billion of imported Chinese machinery, auto parts, and medical devices.  China responded immediately with tariffs on several U.S. products including soybeans and pork.  Several U.S. trading partners have now imposed tariffs on U.S. commodities and processed foods in response to tariffs imposed by the U.S.  With all the threats and tariffs imposed, it’s difficult to stay abreast of where things now stand.  Table 1 summarizes recent tariffs enacted by other countries on U.S. agricultural products which will affect Nebraska.  Continue reading

Egg, Dairy and Chicken Prices Down, Beef Too

CS16_167 2016 Fall Harvest Marketbasket SurevyLower retail prices for several foods, including eggs, whole milk, cheddar cheese, chicken breast, sirloin tip roast and ground chuck resulted in a decrease in the American Farm Bureau Federation’s Fall Harvest Marketbasket Survey.

The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $49.70, down $4.40 or 8 percent compared to a survey conducted a year ago. Of the 16 items surveyed, 13 decreased and three increased in average price.

Egg prices dropped significantly due to production recovering well from the 2014 avian influenza, according to John Newton, AFBF director, market intelligence. Milk prices are down substantially from prior years, particularly compared to record-highs in 2014, due to the current global dairy surplus.

“For all commodities in agriculture there is a lot of product on hand and prices are depressed,” Newton explained.

The following items showed retail price decreases from a year ago:

  • eggs, down 51 percent to $1.48 dozen
  • chicken breast, down 16 percent to $2.86 per pound
  • sirloin tip roast, down 11 percent to $5.04 per pound
  • shredded cheddar, down 10 percent to $4.09 per pound
  • whole milk, down 10 percent to $2.84 per gallon
  • ground chuck, down 9 percent to $4.13 per pound
  • toasted oat cereal, down 9 percent to $2.80 for a nine-ounce box
  • vegetable oil, down 9 percent to $2.39 for a 32-ounce bottle
  • flour, down 7 percent to $2.21 per five-pound bag
  • white bread, down 7 percent to $1.58 for a 20-ounce loaf
  • orange juice, down 5 percent to $3.26 per half-gallon
  • bacon, down 3 percent to $4.40 per pound
  • sliced deli ham, down less than 1 percent to $5.45

These items showed moderate retail price increases compared to a year ago:

  • bagged salad, up 16 percent to $2.85 per pound
  • apples, up 10 percent to $1.59 per pound
  • potatoes, up 3 percent to $2.73 for a 5-pound bag

“Dry conditions in the Northeast and Northwest the last few years likely contributed to smaller supplies and higher retail prices for apples,” Newton said. In addition, he said salad prices are up due to lower output in the West, particularly in California and Arizona.

Price checks of alternative milk and egg choices not included in the overall marketbasket survey average revealed the following: 1/2 gallon regular milk, $1.86; 1/2 gallon organic milk, $4.26; and one dozen “cage-free” eggs, $3.48.

The year-to-year direction of the marketbasket survey tracks with the federal government’s Consumer Price Index report for food at home. As retail grocery prices have increased gradually over time, the share of the average food dollar that America’s farm and ranch families receive has dropped.

“Through the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average. Since then, that figure has decreased steadily and is now about 17 percent, according to the Agriculture Department’s revised Food Dollar Series,” Newton said.

Using the “food at home and away from home” percentage across-the-board, the farmer’s share of this $49.70 marketbasket would be approximately $8.45.

AFBF, the nation’s largest general farm organization, began conducting informal quarterly marketbasket surveys of retail food price trends in 1989. The series includes a Spring Picnic survey, Summer Cookout survey, Fall Harvest survey and Thanksgiving survey.

According to USDA, Americans spend just under 10 percent of their disposable annual income on food, the lowest average of any country in the world. A total of 59 shoppers in 26 states participated in the latest survey, conducted in September.

Dairy and Bacon Prices Down, Apples Too

Lower retail prices for several foods, including whole milk, cheddar cheese, bacon and apples resulted in a slight decrease in the American Farm Bureau Federation’s Fall Harvest Marketbasket Survey.

The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $54.14, down $.12 or less than 1 percent compared to a survey conducted a year ago. Of the 16 items surveyed, 10 decreased and six increased in average price.

Higher milk and pork production this year has contributed to the decrease in prices on some key foods.

“Energy prices, which affect everything in the marketbasket, have been quite a bit lower compared to a year ago. Processing, packaging, transportation and retail operations are all fairly energy-intensive,” said John Anderson, AFBF’s deputy chief economist. Lower energy prices account for much of the modest decrease in the marketbasket.

CS15_128 Fall Harvest Marketbasket SurveyThe following items showed retail price decreases from a year ago:

  • whole milk, down 17 percent to $3.14 per gallon
  • bacon, down 11 percent to $4.55 per pound
  • apples, down 7 percent $1.45 per pound
  • shredded cheddar, down 5 percent to $4.56 per pound
  • flour, down 4 percent to $2.37 per five-pound bag
  • bagged salad, down 4 percent to $2.46 per pound
  • vegetable oil, down 3 percent to $2.61 for a 32-ounce bottle
  • Russet potatoes, down 3 percent to $2.64 for a five-pound bag
  • white bread, down 1 percent to $1.69 for a 20-ounce loaf
  • chicken breast, down 1 percent to $3.42 per pound

These items showed modest retail price increases compared to a year ago:

  • eggs, up 56 percent to $3.04 per dozen
  • orange juice, up 7 percent to $3.43 per half-gallon
  • ground chuck, up 6 percent to $4.55 per pound
  • toasted oat cereal, up 3 percent to $3.09 for a nine-ounce box
  • sirloin tip roast, up 3 percent to $5.67 per pound
  • sliced deli ham, up 1 percent to $5.47 per pound

“As expected we saw higher egg prices because we lost so much production earlier this year due to the avian influenza situation in Iowa, Minnesota and some other Midwestern states,” Anderson said.

Price checks of alternative milk and egg choices not included in the overall marketbasket survey average revealed the following: 1/2 gallon regular milk, $2.21; 1/2 gallon organic milk, $4.79; and one dozen “cage-free” eggs, $4.16.

The year-to-year direction of the marketbasket survey tracks closely with the federal government’s Consumer Price Index report for food at home. As retail grocery prices have increased gradually over time, the share of the average food dollar that America’s farm and ranch families receive has dropped.

 

“Through the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average. Since then, that figure has decreased steadily and is now about 16 percent, according to the Agriculture Department’s revised Food Dollar Series,” Anderson said.

Using the “food at home and away from home” percentage across-the-board, the farmer’s share of this $54.14 marketbasket would be $8.66.

AFBF, the nation’s largest general farm organization, began conducting informal quarterly marketbasket surveys of retail food price trends in 1989. The series includes a Spring Picnic survey, Summer Cookout survey, Fall Harvest survey and Thanksgiving survey.

According to USDA, Americans spend just under 10 percent of their disposable annual income on food, the lowest average of any country in the world. A total of 69 shoppers in 24 states participated in the latest survey, conducted in September.

Retail Meat Prices: Up, Up and Away

Summer grilling season will cost meat lovers a few more dollars this year, according to the American Farm Bureau Federation (AFBF). Wholesale meat prices climbed higher during the first quarter of the year and retail meat prices quickly followed suit.
“Retail prices for beef and pork cuts have steadily pushed into new record territory,” John Anderson, AFBF’s deputy chief economist, said May 7.
“For pork, the average retail price per pound in March – $3.83 – was higher than the prior four months and eclipsed the record level set last fall,” Anderson said.
Grill -burgers

“For beef, the price move in March was more dramatic. Consumers saw the sixth straight month of new record retail prices for fresh beef products, at $5.40 per pound, which is a 23-percent increase compared to the 2010-2012 average,” he explained.
The sharp increase in retail beef prices has not occurred in a vacuum, Anderson noted. Retail pork prices are currently 18 percent higher than in 2010-2012 while chicken is up 9 percent.
“Farmers and ranchers are raising smaller numbers of hogs and cattle. This is the key factor contributing to higher retail meat prices, a trend that is likely to continue through the summer and, at least for beef, into next year,” Anderson said.
The long-term effects of searing back-to-back droughts in 2011 and 2012 resulted in less feed available for cattle, and ultimately forced a substantial decline in cattle numbers that is now resulting in lower beef production. Year-to-date beef production is down by close to 5 percent according to the U.S. Department of Agriculture (USDA).
Porcine Epidemic Diarrhea virus or PEDv, a serious hog disease that poses no risk to humans or food safety, is expected to result in a 2 percent decline in 2014 production according to USDA, further influencing retail prices for bacon, ham, pork chops and other products.
The good news for consumers is that although they will pay a bit more for meats this summer, there will be plenty of everyone’s favorites to go around.
“Meat supplies will continue to be plentiful,” said Anderson. “From burgers to brats, steaks to chops and everything in between, consumers will have no problem finding their favorite meats for summer barbeques and cook-outs,” he said.