Chow down, groceries are cheaper

But bargain on the plate puts strain on nation’s farmers

“It’s a very positive thing for the middle-class and low-income households.”

If you’re just a little irked that gasoline prices have edged up recently, maybe this will cheer you up: Groceries are a bargain.

Average supermarket prices fell 2.2% in September from a year ago, the most since late 2009, and they’ve been down on an annual basis for 10 straight months, the longest such streak since 1959-60, Labor Department figures this week showed.

But falling prices at checkout are spreading hardship across the farm belt and hammering the earnings of grocery chains.

“It’s a very positive thing for the middle-class and low-income households,” says economist Chris Christopher of IHS Global Insight.

Deals abound. A pound of ground beef cost $3.66 last month, down from $4.13 a year ago. Sliced bacon was $5.48 a pound, down from $5.73. A dozen eggs was $1.47, half the $2.97 year-ago price. And a gallon of milk cost $3.23, compared with $3.39 two years ago.

Christopher says many shoppers use the savings to buy more groceries.

Michelle Morris, 45, of Canton, Mich., estimates her family saves $10 to $20 a week at the grocery store. As a result, they eat out less frequently, and Morris cooks new dishes, including tacos, lasagna and casseroles. “It has increased our family time together,” she says.

Consumers benefit from oversupplies of beef, pork, poultry and grains — such as corn, wheat and soybeans — now that farmers have responded to years of skimpy supplies and high prices by ramping up production.

That’s reversing an upward price spiral that began in the late 2000s after the government mandated that refiners blend ethanol into the gasoline supply. Demand and prices for corn — used to make ethanol — soared, leaving less land for wheat and soybeans and pushing up their costs.

Chris Christopher, IHS Global Insight

Then Midwest droughts and floods in 2011 and 2012 further bumped up the price of corn and wheat — feedstocks for cattle, hogs and chickens.

Meat prices spiked as livestock farmers had little choice but to thin their herds.

A virus outbreak in the hog population in 2014 moved pork costs still higher. And egg prices doubled a year ago amid an avian flu epidemic.

Starting in 2013, farmers replenished their herds and crops.

About 212 pounds per capita of beef, poultry and pork is expected to be produced in the USA this year, up from 200 pounds in 2014, estimates Kevin Good, analyst at research firm CattleFax.

A record corn crop of 15 billion bushels is forecast amid favorable weather, up from 13.9 billion last year, says Paul Bertels, economist at the National Corn Growers Association.

Worsening the glut was a sharp decline in U.S. agricultural exports last year amid a strong dollar, sluggish global economy and slower demand from China.

Farmers are feeling the effects. Pigs sell for an average $97 apiece, about a third of the record high of $280 in 2014, according to the National Pork Board. Corn futures are at $3.51 a bushel, down from $8 several years ago.

Brad Greenway, a farmer in Mitchell, S.D., doubled his pig herd to 10,000 four years ago to increase efficiency and take advantage of lofty prices.

Now, he’s losing $20 to $40 per pig, so he’s deferring the purchase of a new truck and turning down the heat in his barn to save a few pennies. Greenway is roughly breaking even on his cattle and soybeans and losing money on wheat.

“Emotionally, it’s a little draining,” he says, noting he’s able to survive because of the profits he banked in the good times.