Get ready to spend more for food starting in the next 18 months and extending into the next decade. That's because the 1996 Farm Act is expected to raise the price of groceries.
The measure changes a long-standing informal federal policy by eliminating many agricultural subsidies over a period of time. That will bring agriculture in the United States closer to a free market."For many years, the U.S. has had an unofficial, unwritten food and agricultural policy, and I believe the central tenet of that is that food should be inexpensive for consumers," said Rod Brown, dean of the Utah State University College of Agriculture.
"We've done that very well," Brown said. Most U.S. consumers spend about 8.3 percent of their income on food, compared to 15 percent in Scandinavian countries, 19 percent in Japan and 25 percent in Italy.
However, Brown said that is likely to change for Americans.
"As subsidies are gradually removed, consumers are likely to see food prices go up to about 12-14 percent of their income over the next 10 years," Brown said.
Actually consumers won't be paying more for food per se, they'll simply be paying directly at the grocery store instead of through tax subsidies, Brown said.
"The thing that might offset that quite a bit is that agriculture has continued to become more competitive. As we allow the market to work, our international sales will continue to increase," Brown said. "Right now, agriculture carries the positive side of the trade balance. That should improve because in a free market our agriculture will be even more efficient than it is."
Georgia Lauritzen, USU Extension nutrition specialist, predicts that food prices in America will rise 5 percent to 6 percent in 1997, compared to the annual increases of about 2 percent that shoppers have seen in recent years.
Lauritzen also said that the new measure will result in less storage of surplus commodity foods.
"People assume that there is some big warehouse up in the sky where we have a nice, ample supply of food. It's not there. We are going to start living more from one production year to another," Laur-it-zen said.
One example of that can be seen now. The corn-producing Midwest had a tough period of weather extremes and drought last year that severely hurt the corn crop. That not only is raising the price of such things as cornmeal, but also is boosting the cost of beef, pork, milk and cheese because livestock requires corn for feed.
In addition, these trends could be troublesome for low-income families that once relied on distributions of surplus commodity foods.
"There used to be commodity foods, especially cheese and powdered milk. These are no longer being stored. At the consumer level, our low-income people will no longer have some of these advantages," she said.
Nonetheless, Lauritzen said food in America still is a bargain.
"Some of the really poor nations spend up to 50 percent or more of their income on food and they have inadequate diets at that," she said. "We must not lose sight of the fact that we're really lucky."