Food-Cost Shocks Ripple Worldwide from Iowa
Jan. 29, 2011
Shoppers who have seen hamburger prices increase as much as 10 percent in recent months will pay even more for burgers, steaks and other meat products as a result of a commodities boom that is putting money in Iowa farmers’ pockets while it rocks the rest of the world.
One estimate has meat prices rising 4 percent this year.
Food cost increases in 2011 are likely to jolt consumers because they follow a three-year period of flat or declining prices.
The higher prices are the result of decreased supply and increased demand. As U.S. cattle and hog herds have reached their smallest levels since 1958, export demand has risen by as much as 50 percent in recent months.
Another factor is an 85 percent increase since last summer in the price of corn, a commodity that is economically and emotionally symbolic to Iowa because it is the prime feedstock for cattle and hogs.
McDonald’s, long a bastion of low-cost food, said last week the rise in commodity prices could force it to raise the cost of a Big Mac and other items by more than 2 percent. The Texas Roadhouse steak eatery chain said it too would raise menu prices.