Get Ready For Higher Food Prices: Got Chickens?

02-10-2011 • ZeroHedge.com

From Omaha.com Shoppers could see higher grocery bills as early as three months from now, though most of the impact won't be felt for another six months, said Scott Irwin, an agricultural economics professor at the University of Illinois. Chicken prices are among the first to rise because the bird's life span is so short that higher feed costs get factored in quickly, he said. Price hikes for hogs take about a year and cattle two years. Prices on packaged foods take six or seven months to rise. Tyson Foods, the nation's biggest meat company, said chicken, beef and pork prices are expect to rise this year, if only slightly, as producers seek to cover costs. ConAgra Foods Inc. — the Omaha-based producer of brands including Healthy Choice, Banquet and Chef Boyardee — is raising prices on some of its products because of higher costs for corn and fuel, said Teresa Paulsen, a spokeswoman. The price rally has bolstered the financial fitness of America's crop and livestock operators over the past eight months. Midwestern cropland is yielding record values. Rural banks and equipment makers report record profits. “We're seeing record income levels for the ag community and ... wealth accumulation that cannot be denied,” said Bruce Johnson, an agricultural economist at the University of Nebraska-Lincoln. “We've moved into a whole new level.” Said Bruce Babcock, an agricultural economist at Iowa State University: “Farmers are going to be earning quite a bit more money.” Jason Henderson, Omaha branch executive for the Federal Reserve Bank of Kansas City, said farmers are buying more tractors, pickup trucks, grain bins and land. “And they also come to Omaha to shop and go to events,” he said. But it hasn't been simply a spending spree, Henderson said. Farmers are paying down debt and fewer are seeking loan renewals or extensions. “It's a good time to be an ag banker,” said Brian Esch, president of McCook National Bank in southwest Nebraska. “But I have concerns over what this means for consumers. If one guy is selling at a record profit, someone is buying at a record level.”