Catherine Wilson.

Thursday, May 21, 2009

Catherine Wilson, Bureau Chief
Northern Westchester

The Coming Food Crisis:
Robbing Peter To Pay Paul

If you feel lately that your wallet is hurting at the supermarket, you’re not alone. According to the United States Department of Agriculture
(USDA), food prices in the United States rose 4% in 2007, compared with an average 2.5%, per year, for the previous 15 years. The USDA expected increases in 2008 to be far greater. The Consumer Price Index (CPI), issued in April 2008 showed expected increases in food prices for last year were another 4.8%.

The dramatic increases in food prices, globally, are creating food shortages and causing riots worldwide. The Guardian investigated what is behind this mounting crisis. The reasons for these increases go far beyond global warming, changing weather patterns, and energy costs.

For the past 25 years, the United States Department of Agriculture encouraged conservation by farmers to limit production of certain crops to stabilize food prices. Under the Conservation Reserve Program, farmers could earn more by not planting certain crops, and the government
could keep the prices of those crops stable.

However, in recent years, the snack food and energy industries have been upsetting this delicate balance. A coalition of ethanol, baking, snack foods and other industry groups are now offering incentives to farmers to grow the desired crops for their industries. Crops such as soybeans, wheat, and corn are now in big demand for uses other than for domestic food consumption. These new markets have pushed up prices.

The USDA incentives cannot compete with the industry payments, overriding the federal government’s long-standing methods of controlling the costs of our nation’s food supply. In addition, the demand for corn, specifically, in recent years to produce ethanol has swayed farmers away from other staples, such as wheat and soybeans. Thus, the rising costs of these staple crops are having a domino effect across the farm
industry itself as higher soybean prices mean higher feed costs for farm animals. The demand for ethanol has increased the cost of corn, ironically increasing the cost of energy for the production and transportation of crops. And, the high wheat costs are affecting our local bakeries and even our pizza shops.

Michael DiNardo, owner of Silvio’s restaurant in Thornwood, told The Guardian that his food costs have increased an average of 50% in the last year alone. “That’s an average increase”, DiNardo stressed. “Some items, such as dairy and fowl, have increased by as much as 200% over last year’s prices. Our tomato distributors have already warned me to expect another increase, and our wheat distributors are warning me of continuing shortages come summer. at’s my livelihood – we can’t make pizza without flour,” DiNardo added.

Rising costs of ingredients are nothing new to the restaurant industry. DiNardo noted that he has usually been able to absorb temporary increases before. “Usually prices increase for a period, like the summer, but then come back down. We try to absorb a temporary increase where we can, but
this is looking like it’s here for the long-term.”

With a long-term problem, the increase cannot be absorbed by restaurants and have to be passed along to consumers. “I’ve already had to raise my prices and I did a major price increase a while ago,” DiNardo said. “When I raised my prices, I was very upset. I live in the community and I
see my customers every day.” The rising costs have also placed greater emphasis on items that were once an after-thought. “Mozzarella used to be the most expensive item I purchased,” DiNardo noted. “But wheat is almost as expensive. It used to only increase a penny or two at a time. But it’s been competing with mozzarella as the most expensive ingredient”.

Local supermarkets are also feeling the pinch of rising prices. Stew Leonard, Jr., President of Stew Leonard’s Supermarkets, spoke to The Guardian about how they are dealing with this issue. “We buy from local farmers so we speak to them on a constant basis. Our dairy farmer has over 3,000 cows on his farm. The cost to heat his barn for those cows has doubled. It now costs him more a day to feed a cow. Since we deal with small local farmers, if they tell me they have to increase their price to me, I don’t want to say no because that could but them out of business. But if we raise prices, sales drop. So we try to wait as long as we can while still being fair to our farmers. The idea for us is to respect our suppliers and to get the best quality for our customers. But our farmers can’t do that if they’re hurting financially. So we work with them to find solutions.”

Farm costs are not the only increases affecting our local supermarkets. Energy costs are taking a toll as well. According to Stew Leonard, rising energy costs are impacting the transportation of the products he is purchasing. It is also affecting non-farm products. Leonard told us, “I spoke to
our fishing boat and he told me that it cost him $500 to fill up his tank 3½ years ago, and that last year it cost him $1,000 to fill the same tank to go out”. Leonard’s solution is to work directly with his farmers, fishermen, and suppliers.

“We try to work with our suppliers and give everybody the best bang for their buck. In an economy like the one we have, you have to keep your prices sharp”. Leonard notes that not every item on their shelves is affected by the food shortages and energy costs. Some items are actually doing
well. Last year the high Euro made wines more expensive, but other countries, including the United States, looked at this as an opportunity to gain market share.

So they lowered their prices to compete. We saw the same trend with cheese. Plus, as food costs increased, and going out to dinner became more expensive, coupled with weak economy, people ate at home more. So supermarket sales actually increased. Leonard’s began getting more requests for recipes while seeing an increase in wine sales.

The rising cost of food is not only affecting our local restaurants and supermarkets, but it is also placing hundreds of thousands of county residents at risk. Christina Rohatynskyj, the Executive Director of Food Patch, told The Guardian that they were seeing the impact of rising food costs first-hand last year. “We purchased a lot of food for distribution, and we saw the changes in costs. Plus, many of our food pantries, and soup kitchens, and other organizations, were telling us that they were seeing more people come in for help. They told us if they had more resources, they could give out more food because the demand is there. As our economy grows worse, there are going to be more people who will need help to stretch their
food dollars.”

The number of county residents who are already hungry or at risk of being hungry is dramatic. Rohatynskyj estimates that “there are approximately 200,000 people in this county who are hungry or at risk of being hungry – that’s one out of every five residents! According
to the 2006 Census, the median income in Westchester County was about $71,800.

That means about 450,000 people, or half of our total population, fall below this income level. An average family of four or five cannot live in Westchester County on an income of $71,800, let alone less than that”. The statistics of who the hungry in our midst are is equally dramatic. “Thirty-six percent of those who are hungry in Westchester County are children under the age of 18” Rohatynskyj noted. “Almost 30% of our residents over the age of 50 fall into this risk area, along with 15% of our seniors over 65. Over 83% of the individuals who come to us for help are United States citizens and only 5% are homeless. Most of the individuals we serve, about 50%, are the working poor. They have a job, but cannot afford to feed their families. For many people in our area, they have to choose every day between paying rent, prescriptions or buying food”.

According to the United Nations Food and Agriculture Organization, increasing food prices, coupled with food shortages, are placing a strain on already impoverished nations around the world. The President of the World Bank, Robert Zoellick, announced in mid-April 2008 that 33 nations were already at risk of social unrest because of the rising prices of food. In the United States, most households spent less than 16% of their budget on food. But in developing nations, that number was closer to 50% or even 75% (Nigeria) of their income. The World Bank has noted that the doubling of food prices in the past three years could push more than 100 million people into poverty. The United Nations attributes this increase to poor weather for crops in many countries, increased demand by growing populations, and a substitution of growing crops for food staples for the production of alternative fuels instead. Riots over the shortages of food in several impoverished countries last year had already led to deaths leading
former President Bush to release $200 million in emergency aid.

The demand for alternative fuels led to the production of ethanol which siphoned away the corn production in our country and globally. Ironically, the solution for one of our nation’s problems has resulted in the creation of a greater problem in our midst. One short-term solution to the food crisis would be to increase production locally. Dr. Susan Rubin, founder of the Better School Food organization (pro-filed by The Guardian in 2007),
advocated a return to backyard gardens. “Not only will the food be healthier, but gardening has therapeutic values – it helps relieve stress. Plus, it is a better environmental use of our land than drowning it in pesticides to keep our lawns weed-free,” Dr. Rubin notes.Westchester County Government even offered several workshops in April and May last year at the Hilltop Hanover Farm in Yorktown Heights to assist local residents in composting a backyard organic farm and other topics.

In the meantime, middle class residents, however, are still faced with paying for their weekly grocery shopping bills. Even limiting purchases to mere food basics, without adding cleaning supplies or toiletries or snacks, can mean a minimum weekly bill of around $150 or more for a family
of four. Now that soda is cheaper than milk, local families are already making unhealthy choices to keep their food costs down.

The immediate impact of rising food costs was already evident last year with food riots and sticker shock at our supermarkets. But the long-term impact could be even greater. The threat to our health and our national security has yet to be acknowledged.