By TIM THORNBERRY
Kentucky Correspondent

LOUISVILLE, Ky. — Last year was a rollercoaster for most consumers, with record fuel prices and declining home values. Along the way, farmers saw commodity prices fall from record levels but consumers were left with high costs at the grocery store.
While the price of fuel has dropped drastically, many people are still seeking ways to combat those food prices.

“Historically, retail food prices are ‘sticky,’” said Larry Jones, agricultural economist with the University of Kentucky (UK) College of Agriculture. “What that means is that retail prices increase very slowly as commodity prices go up, but at the same time, retail prices are very slow to decline once commodity prices go down.”
Jones added that U.S. retail food prices in 2008 increased at the fastest rate in nearly 30 years. In fact, the Consumer Price Index for food will have increased close to 7 percent in 2008, with a similar outcome expected in 2009.

The USDA list many reasons for the high cost of eating, including stronger global demand for food, increased U.S. agricultural exports resulting from stronger demand and a weaker dollar, weather-related production problems in some areas of the world and increased use of some food commodities, such as corn, for bioenergy uses.

That higher demand comes from countries such as China and India would be fine if the supply could keep up – but Jones said world production increases have been steadily slowing as a result of less available land and annual productivity. Measures to help the economy have helped in some ways, but had the opposite reaction in others.

For instance, the drop in interest rates to stimulate the economy has helped many with major purchases, but it has added to the devaluation of the U.S. dollar, keeping imported foods high and food exports a bargain, which, in turn, stimulates U.S. export markets.

“Retail pricing of food appears to be predicated on the assumption that consumers dislike fluctuating prices on something as basic as food,” Jones said, citing the example that wholesale food prices increased approximately 8 percent in each of the past two years. Yet the retail price of food increased less than 5 percent on average each year.

“As commodity prices increased, retailers absorbed the increase, but now as commodity prices decline, retailers are not following suit by lowering prices at the retail level,” he said.

“Remember, too, the farm share of a hypothetical retail food dollar is about 20 cents, meaning the other 80 cents goes for such things as transportation, utilities, packaging, processing, advertising and profits. In other words, agricultural commodities represent a relatively small portion of the cost of food at the retail level.”
Food and mood

It was near the end of 2008 when the federal government announced the country was in a recession – something consumers figured out months earlier – lending to an increase in stress. According to the American Psychological Assoc. (APA), “in June 2008, more people reported physical and emotional symptoms due to stress than they did in 2007, and nearly half (47 percent) of adults reported that their stress has increased in the past year.”
The APA also reported that “almost half of Americans (48 percent) reported overeating or eating unhealthy foods to manage stress, while one in four (39 percent) skipped a meal in the last month because of stress.”

It is more important than ever to practice healthy eating habits; many believe that involves eating foods grown close to home. A study late last year conducted by a UK rural society class found many people concerned about food issues wanting to see more local foods available to them.

According to the survey “despite income differences, people were universally aware of food issues and wanted to see more local food offered in area grocery stores and restaurants.”

“It doesn’t matter. It cuts across income levels and education levels. A lot of people are asking for more local food and they want to improve our understanding about how food is an important part of our local culture,” said Keiko Tanaka, associate professor in the UK College of Agriculture’s Department of Community and Leadership Development.

The survey, which was conducted at a variety of food venues – including a large chain food store, a local foods co-op and at farmers’ markets – is just one component of an ongoing study in its third year about local food issues, begun by sociology professor Patrick Mooney.

“It doesn’t matter where you talk to them, people are saying we want more locally produced food,” Tanaka said. “They want transparency, meaning they want to know where their food is from. Many of them also said we need to improve the food knowledge in schools.”

In 2007 Tanaka’s class investigated food prices and discovered the prices in the neighborhood corner stores were higher than larger, full service grocery stores. While not a surprise, that adds to the burden on those who have no way to those larger markets.

Organizations such as the Community Farm Alliance (CFA) have touted and supported a local food economy for more than 20 years. The group has helped in the creation of urban farmers’ markets as well as supporting legislation, including House Bill 611, which regulated the spending of tobacco settlement funds and sent half of that money back into the agriculture industry.

Through many initiatives, such as  L.I.F.E. (Local Innovative Food Economy), the group works with 2,000 members in 75 counties to get its message out. L.I.F.E.’s goal is to have the majority of food consumed in Kentucky grown, processed and sold here.

Grasshoppers Distribution, a CFA-supported project, began bringing farmers from Kentucky and southern Indiana together in 2006 to market and distribute their food products locally. Those products include produce, fruits, herbs, milk and cheese, an assortment of meats including poultry, pork and beef and maple syrup, sorghum and honey.

The goods are distributed directly through their Community Supported Agriculture (CSA) program or wholesale deliveries to restaurants, groceries, cafeterias and other institutions in the Louisville metro area. Ivor Chodowski, one of Grasshoppers’ four farmer owners and interim wholesale manager, said “transparency” is one of the key words along with “local” when it comes to their operation.

“I think what consumers want today even more than cost is to know who is growing their food,” he said. “In developing a local food economy, some of that includes education. We have an epidemic of obesity and diabetes and it would be wise to think long-term and understand we’re paying for cheap food now with long-term health care later.”