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Thread: some interesting facts about the effects of high energy costs on food prices ...

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    Banned Melonie's Avatar
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    Default some interesting facts about the effects of high energy costs on food prices ...

    (snip)"By Chris Lawrence, CNN
    Last Updated: June 19, 2008: 4:42 PM EDT

    Friday, June 20 6-9 a.m. ET

    Honolulu (CNN) -- Imagine going to your local grocery store and paying over $8 for a jar of Jif peanut butter. How about $5.50 for a loaf of white bread, $6.50 for a gallon of milk or $7.19 for a half-gallon of orange juice?

    These are just some of the prices we found in a recent survey of Hawaii's supermarkets. Families there are certainly paying the price for living in paradise.

    Dave and Susan Ohamada were leaving the Honolulu Safeway when we asked to see their bill.

    "I just spent $4.29 for a half-gallon of milk - and that was a sale price," said Susan. "Kleenex! I bought Kleenex for $2.99!" The Ohamadas have two young daughters, Rachel and Erin, and these days, shopping for a family of four is enough to empty their wallets.

    Families like the Ohamadas have lived their whole lives in Hawaii, where about 80% of the food has to be imported from the mainland. So even in the best of times, food is more expensive here.

    Last year overall inflation was up 4.8% in the Honolulu metro area, while food prices were up 5.5%. That compares to a 2.8% national inflation rate, and a 3.9% rise in national food prices.

    Recently however, prices have started shooting up even higher. With the explosion in fuel prices, shipping companies have been tacking on fuel surcharges, and they're going up almost every week.

    Tim Kennedy runs a Los Angeles-based warehouse that ships produce to Hawaii. "We're seeing these increases from all over. From the trucks that bring this product into here, to the airlines, to the ships that take these containers to Hawaii."

    Kennedy said he's absorbed some of the costs, but not all. "It's a chain. It starts on one end and ends up at the consumer at the checkout stand."

    Which means lettuce is running $2 per pound. Tomatoes are at $6.39 a pound and a 3-pack of red peppers costs $7.

    Ira Rohter is a professor at the University of Hawaii, who has studied the state's agriculture business. Rohter sees no let-up in the high prices, and said Hawaii's residents have only one choice: "You grow your own food. You may not have noticed, we can grown our own food in Hawaii."

    Rohter said the islands will never be 100% self-sufficient, but sees good agricultural land that would reduce how much it has to import. That land, however, is expensive. You can't afford to grow celery and carrots on land that costs $80,000 an acre. Furthermore, since most farmers here have short-term leases, there's no real incentive to invest in technology that improves production.

    So, some shoppers have adapted on their own. Corrine Tantog has five kids to feed, but she recently started buying only what's in season: "I went to a nutrition class so that kind of helps. They tell you how to buy food."

    That means going without luxuries such as ice cream, which costs about $7.60 per gallon. But when a box of cereal can cost nearly $8, and $7.19 only buys one pack of Kraft American cheese slices, saving money is easier said than done. "(snip)


    While shipping produce to Hawaii obviously involves greater distances thus proportionally higher shipping charges, the price of food at every mainland supermarket is similarly affected in proportion to the shipping distance. As gasoline / diesel prices continue to rise, so will the shipping costs and so will the price at the checkout counter !!!

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    Veteran Member LadyLuck's Avatar
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    Default Re: some interesting facts about the effects of high energy costs on food prices ...

    No way! You actually read stuff from CNN? Isn't that some kind of sacrilege for you folks on the right side of aisle? Better becarefuk Rush and Hannity will be coming to get ya! Just kidding


    But seriously, there is very good advice for all of us not rich enough to not bother to caring about a budget near the end of this article.

    Buying seasonal foods can help alot with costs and has great health benefits too.
    There never was a good war or a bad peace.

    Benjamin Franklin

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    Default Re: some interesting facts about the effects of high energy costs on food prices ...

    I thought prices were getting expensive here! That's really crazy.

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    Banned Melonie's Avatar
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    Default Re: some interesting facts about the effects of high energy costs on food prices ...

    No way! You actually read stuff from CNN? Isn't that some kind of sacrilege for you folks on the right side of aisle?
    Actually, I'll take FACTS from wherever I can find them. Again, it's not my fault that certain media outlets often choose not to report certain facts which their editorial policy deems to be 'inconvenient' ... which in turn forces me to consult less mainstream media outlets to find those facts !


    I thought prices were getting expensive here! That's really crazy
    What the Hawaiian example actually does is 'amplify' the energy related shipping cost component that is present in all 'supermarket' food product prices. Thus rising costs of gasoline / diesel also affect mainland 'supermarket' prices, but to a lesser degree since the shipping distances thus transporation energy consumption requirements are proportionately lower.

    Of course many other products besides food have a similar energy related shipping cost component as well ! Thus as oil prices continue to rise, the prices of all of these products will continue to rise as well ! In point of fact, shipping cost increases which have already been absorbed by supermarkets (and many other products / stores) have yet to fully work their way into the price tags on supermarket shelves. Instead these higher shipping costs have cut into supermarket (and other businesses) profit margins, a situation that cannot continue in the long term. As a result, even if the price of oil stabilizes and shipping costs stop increasing (which is a whole 'nuther discussion), additional price tag increases to cover previous shipping cost increases are already in the 'pipeline' (no pun intended).

    ~
    Last edited by Melonie; 06-22-2008 at 07:10 AM.

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