The drought that grips half of the United States could drive up food prices next year.
The U.S. Department of Agriculture predicts grocery prices could rise 3 to 4 percent next year, in large part because the record drought is pushing up prices for grains used as livestock feed. That projected increase is still below the roughly 6 percent food inflation in 2008, during the recession.
Rob Zeaske, CEO of Second Harvest Heartland food bank, said a 3 to 4 percent increase would not be a giant tipping point for low-income families in Minnesota, but it would create yet another strain on tight budgets.
"We know that for a lot of low-income families, they typically spend a bigger percentage of their income on food relative to the rest of the country," Zeaske said. "That is amplified for those low-income neighbors. And that's a big deal. I think not only the amount of food, if they're struggling to find some of that, but the nutritional quality of the food is also going to be an important trade-off to understand."
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Rising prices are also affecting donations to the food banks, Zeaske said. Traditionally, food banks have relied heavily on donations from big food manufacturers. As their supplies get more expensive, those companies are trying to reduce the surplus production that would otherwise be donated.
"They're getting more efficient, very actively, to compensate for some of those increasing ingredient prices, if you will," Zeaske said. "That's a big implication. Nationally, Feeding America is expecting the food from traditional manufactured sources to decrease at between three-five percent a year, and that's really what our system was founded on."
Zeaske says Second Harvest is looking for new food sources to compensate for the loss.
For example, the food bank is working to bring in agricultural surplus, crops like sweet corn and potatoes that go unharvested in Minnesota fields. Those crops are a nutritious and largely untapped source for local food banks.
Beef prices are expected to see the greatest jump next year, by 4 to 5 percent.
Dairy product prices are forecast to climb 3.5 percent to 4.5 percent. Poultry and egg prices are projected to rise 3 percent to 4 percent. Normal grocery price inflation is about 2.8 percent. The USDA kept its projected food price increase for 2012 steady at 2.5 percent to 3.5 percent.