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Meaty deal: Prices may fall despite costly feed

by 5m Editor
7 March 2007, at 8:05am

WASHINGTON, D.C. - Consumers looking for a bargain at the supermarket may want to check the pork chops or tenderloin.

Danny Bruck stocks boneless pork chops in a meat case at a Fareway supermarket in Ankeny on Monday. Consumers could gain lower prices for turkey, beef and pork, economists say. That’s because there’s a large supply of the meats.

That will make little sense to shoppers who have heard that sharp increases in corn and soybean prices, driven by the nation's booming ethanol industry, will make food cost more.

Livestock producers rely on corn and soybeans to feed their animals, but farms and processors cannot easily pass their higher costs to consumers. In fact, government economists say that prices for pork, beef and turkey will actually drop this year despite the higher grain prices that are squeezing both farmers and meatpackers. The reason: There are relatively large supplies of all three types of meat.

"The consumer is king," said Shayle Shagam, a U.S. Agriculture Department analyst. "The consumer will decide how much of each commodity they want and retailers will make some adjustments to move the product."

Jon Madison, the meat manager at a Fareway supermarket in Ankeny, said the prices of pork, chicken and turkey have held steady in recent weeks.

"I guess it takes a while to trickle down," he said.

The price of pork is expected to average around $2.75 per pound in 2007, down from last year's average of $2.81.

That is good for consumers, but Shagam said the livestock and packing industries will have to eat some of the higher production costs for the time being. While Iowa's corn and soybean growers benefit from the higher prices for their crops, the state also is the nation's No. 1 producer of pork and eggs and a major producer of beef and turkeys.

That concern has reached Congress: A House agriculture subcommittee led by Rep. Leonard Boswell, D-Ia., will hold a hearing Thursday on feed costs.

Source: DesMoinesRegister.com

5m Editor