Retail food prices at the supermarket decreased slightly for the fourth consecutive quarter and are significantly lower than one year ago, according to the latest American Farm Bureau Federation (AFBF) Marketbasket Survey.

The informal survey shows the total cost of 16 food items that can be used to prepare a meal was $46.03, down 26 cents from the second quarter of 2009 and $4.18 lower, or about 10 percent less, compared to one year ago.

Consumers continue to benefit from modest, steady declines in retail food prices at the grocery store, notes AFBF economist Jim Sartwelle.

"From a nutritional perspective, it's important to note that our volunteer shoppers found significantly lower retail prices for several protein-rich foods that are staples in the diet of most Americans, including milk, cheese, eggs and ground beef, compared to one year ago," he says. "Again this quarter and compared to one year ago, the foods that declined the most in average retail price are among the least-processed items in our marketbasket."

Shredded cheddar cheese, ground chuck, whole milk, vegetable oil and Russet potatoes declined the most in price from quarter-to-quarter. Shredded cheddar cheese dropped 23 cents to $4.08 per pound. Ground chuck dropped 17 cents to $2.65 per pound. Whole milk dropped 14 cents to $2.87 per gallon.

Compared to survey results a year ago, whole milk decreased 27 percent; cheddar cheese dropped 23 percent; potatoes decreased 22 percent; apples dropped 19 percent; eggs decreased 16 percent; vegetable oil dropped 16 percent; and ground chuck decreased 10 percent in retail price.

"Farm gate prices paid to farmers in the dairy and livestock sectors have drastically declined over the past year, which is reflected in the lower retail prices for some of these minimally processed foods," says Sartwelle.

Compared to one year ago, bagged salad increased the most in price among the items in the basket, up 16 percent-most likely reflective of the processing and transportation costs involved in marketing the product, said Sartwelle.

AFBF's third quarter marketbasket survey tracks closely with the federal government's August 2009 Consumer Price Index report for dairy and related products, which showed a 4 percent decline for the ninth consecutive month.

Tracking milk and egg trends
For the third quarter of 2009, shoppers reported the average price for a half-gallon of regular whole milk was $1.89, down 3 cents from the prior quarter. The average price for 1 gallon of regular whole milk was $2.87, down 14 cents. Comparing per-quart prices, the retail price for whole milk sold in gallon containers was about 25 percent lower compared to half-gallon containers, a typical volume discount long employed by retailers.

The average price for a half-gallon of rBST-free milk was $3.32, up 14 cents from the last quarter and about 75 percent higher than the reported retail price for a half-gallon of regular milk.

The average price for a half-gallon of organic milk was $3.77, up 14 cents compared to the previous quarter and double the reported retail price for a half-gallon of regular milk.

For the third quarter of 2009, the average price for one dozen regular eggs was $1.44. The average price for "cage-free" eggs was $3.04 per dozen, around 95 percent more per dozen than regular eggs.

Regular eggs dropped in retail price by 16 percent from the third quarter of 2008 to the third quarter of 2009, while "cage-free" eggs increased in price about 1 percent over the year.

Farmer's share of food dollar
As retail grocery prices have increased gradually over time, the share of the average food dollar that America's farm families receive has dropped.

"Starting in the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average. That figure has decreased steadily over time and is now just 19 percent, according to U.S. Department of Agriculture (USDA) statistics," Sartwelle says.

Using the "food at home and away from home" percentage across-the-board, the farmer's share of this quarter's 16-item marketbasket total (excluding prices for half-gallon whole milk, organic and rBST-free milk, and "cage-free" eggs) would be $8.75.

Further, the average price farmers received for their products in September remained flat from the August level and was 18 percent lower compared to a year ago.

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.

Click here for more

Source: American Farm Bureau Federation