1. Department of Agricultural Economics Purdue University Food Price Outlook Corinne Alexander cealexan@purdue.edu Purdue University August 19, 2011@purdue.edu

2. Department of Agricultural Economics Purdue University

3. Department of Agricultural Economics Purdue University

4. Department of Agricultural Economics Purdue University

5. Department of Agricultural Economics Purdue University http://www.ers.usda.gov/Briefing/CPIFoodAndExpenditures/Data/cpiforecasts.htm

6. Department of Agricultural Economics Purdue University

7. Department of Agricultural Economics Purdue University Changes in Food Price Indexes, 2008 through 2012 Item RelativeAnnual Forecast importance 1 2008200920102011 2 2012 2 Consumer Price IndexesPercentPercent change All food100.05.51.80.83.0 to 4.02.5 to 3.5 Food away from home43.14.43.51.33.0 to 4.02.0 to 3.0 Food at home56.96.40.50.33.5 to 4.53.0 to 4.0 Meats, poultry, and fish12.54.20.51.95.0 to 6.04.5 to 5.5 Meats7.93.5-0.62.86.0 to 7.04.5 to 5.5 Beef and Veal3.74.52.97.0 to 8.06.0 to 7.0 Pork2.52.3-2.04.76.5 to 7.54.0 to 5.0 Other meats1.73.12.3-0.13.0 to 4.02.5 to 3.5 Poultry2.451.7-0.12.5 to 3.53.0 to 4.0 Fish and seafood2.263.61.15.5 to 6.54.0 to 5.0 Eggs0.714-14.71.54.5 to 5.53.0 to 4.0 Dairy products6.18-6.41.15.0 to 6.03.0 to 4.0 Fats and oils1.713.82.3-0.36.5 to 7.54.5 to 5.5

8. Department of Agricultural Economics Purdue University Changes in Food Price Indexes, 2008 through 2012 Item RelativeAnnual Forecast importance 1 2008200920102011 2 2012 2 Consumer Price IndexesPercentPercent change Fruits and vegetables8.46.2-2.10.23.5 to 4.52.0 to 3.0 Fresh fruits & vegetables6.45.2-4.60.63.5 to 4.52.0 to 3.0 Fresh fruits3.34.8-6.1-0.62.0 to 3.01.5 to 2.5 Fresh vegetables3.25.6-3.42.04.5 to 5.52.5 to 3.5 Processed fruits & vegetables1.99.56.6-1.31.5 to 2.53.0 to 4.0 Sugar and sweets2.25.55.62.22.5 to 3.52.0 to 3.0 Cereals and bakery products7.910.23.2-0.83.5 to 4.52.5 to 3.5 Nonalcoholic beverages6.74.31.9-0.92.0 to 3.01.5 to 2.5 Other foods10.75.23.7-0.52.5 to 3.52.0 to 3.0 Fruits and vegetables8.46.2-2.10.23.5 to 4.52.0 to 3.0 Fresh fruits & vegetables6.45.2-4.60.63.5 to 4.52.0 to 3.0 Fresh fruits3.34.8-6.1-0.62.0 to 3.01.5 to 2.5 Fresh vegetables3.25.6-3.42.04.5 to 5.52.5 to 3.5

9. Department of Agricultural Economics Purdue University http://www.ers.usda.gov/Publications/ERR114/ERR114.pdf

10. Ingredient Prices Up CommodityPrice Today 2010200920082007 Corn$6.99$4.12$3.24$5.75$3.41 Crude Oil$82.50$75.45$72.85$115$68.60 Soybeans$13.50$10.34$9.57$12.94$8.49 Soybean Oil$0.55$0.41$0.36$0.53$0.36 Wheat$7.11$6.56$4.69$8.75$7.26 Live Cattle$115.20$96.25$88.83$100.70$94.38 Lean Hogs$86.65$75.98$46.95$75.10$70.65 Milk$19.00$15.37$12.90$17.20$19.83 Late August CME Nearby Futures Quotes

11. Ingredient Prices Up CommodityPrice Today 2010200920082007 Coffee$2.65$1.77$1.21$1.42$1.13 Sugar$0.29$0.20$0.24$0.13$0.09 Oats$3.45$2.65$2.11$3.45$2.42 Orange Juice$1.74$1.38$0.90$1.09$1.25 Cocoa$2,985$2,698$2,772$2,864$1,868 Late August CME Nearby Futures Quotes

12. 2012 Food Price Prediction ERS predicts (June 25, 2011) 3.0 to 4.0% for 2011 2.5 to 3.5% for 2012 Corinne 3.5 to 5.0% for 2011 3.0 to 4.0% for 2012 Big unknowns are Weather and it’s impact on crop and livestock production Global economy Individual categories will see sharp increases Pasta, beef, … Department of Agricultural Economics Purdue University

13. I think most farmers here know, particularly if you’re in livestock farming, right now the costs of feed keep on going up and the costs of food as a consequence are also going up. Only about 4 percent of that is accounted for by corn being diverted into ethanol, but as you see more and more demand placed on our food supplies around the world — as folks in China and folks in India start wanting to eat more meat and commodity prices start going up, it’s going to be important for us to figure out how can we make biofuels out of things that don’t involve our food chain. -Obama, 8/17/2011 Department of Agricultural Economics Purdue University

14. Questions?