Dropping gas prices may make a road trip to Grandma's for Thanksgiving cheaper this year. However, increased food prices may gobble up your savings.
The food market is beginning to stabilize, but that doesn't mean that consumers should expect price slashes at their favorite grocery stores any time soon. In fact, the American Farm Bureau is predicting a 6 percent increase in the cost of the traditional Thanksgiving dinner for 10 people.
"Since 1986, the American Farm Bureau Federation's volunteer shoppers have priced items belonging on the classic Thanksgiving dinner plate," said American Farm Bureau economist Jim Sartwelle in a radio interview this month with the Nebraska Farm Bureau's Tina Henderson. "We find this year that this feast for 10 costs $44.61, up a little over 6 percent from 2007."
Sartwelle said food prices have increased dramatically over the past year and a half, but when taking inflation into account, the price of the Thanksgiving meal is down 8 percent from 1988.
Price increase not affecting organic options
Jim Nelson, general manager of Open Harvest Cooperative Grocery, said that although organic food prices have increased 5.5 percent in the past year, traditional Thanksgiving foods' costs remain at the same level.
Open Harvest currently sells free range turkeys for $2.99, and Nelson said the store sold turkeys at the same price last year.
"We're selling our free range turkeys at the same price as we did last year," Nelson said. "It's all supply and demand. Prices go down as the demand falls."
Nelson, however, said that he has seen consumer habits change at his store because of price increases.
"It's all based on the market," Nelson said. "We track members and non-members both, and we've seen a reduction in basket sizes and the size of items."
Instead of gallons of milk, consumers are buying half gallons, and instead of a full dozen eggs, they are buying a half dozen.
National food levels are up, but Nelson said that doesn't necessarily hold true in Nebraska.
"But the national rate affects people's perceptions when buying food," Nelson said.
Grain and fuel prices too much for local producers
The popularity of corn ethanol is creating a problem for turkey producers around the nation and especially in Nebraska.
After 70 years of producing turkeys, the Nebraska Turkey Growers Association (NTGA) will close its plant in December. Mary Torell, public information officer for the Poultry & Egg Division Nebraska Department of Agriculture, said the main reason for the plant's closing is ethanol production.
"There is not enough feed to continue producing turkeys," Torell said. "[The NGTA] will close their plant indefinitely in December. For the past couple months, the producers have been losing money on each one of their turkeys."
Torell said the NTGA has put the plant up for sale but hopes the closing is not permanent. However, the outlook is not good for the production of turkeys in the state.
The National Turkey Federation said in a press release that the price of turkey feed has significantly increased turkey production costs. At one point this year, feed costs nearly doubled, and 70 percent of the costs associated with raising turkeys are from feed. As ethanol mandates and subsidies have driven up the price of corn and other commodities, poultry and livestock farmers have been squeezed, and consumers are now faced with a 7.6 percent price inflation on animal protein products, the federation said.
Susan Joy, general manager of the Nebraska Poultry Industries, said this year's price of turkeys will probably not be affected.
"The inventory is good, and contracts have been met at a certain price," Joy said.
Joy said that grain, fuel and operating prices have increased significantly over the past year, and this will result in a price increase for animal protein products.
"There is plenty of supply in inventory," Joy said. "But there will be a significant price increase seen next year, after the inventory and contracts with retailers run out."