With prices rising, cheaper meals begin at home


The Atlanta Journal-Constitution
Published on: 04/07/08

Robin Howell used to throw wine-and-brie parties for her girlfriends. Now she worries about the price of milk and eggs.

The wine-and-cheese gatherings are a thing of the past, just like dollar-a-dozen eggs. The average price for a carton is $2.17 now.

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Food prices rose at the fastest clip in nearly two decades in 2007, and they're on track to do the same in 2008, according to the U.S. Department of Agriculture. Squeezed by higher energy prices and the rising costs of other necessities, consumers are spending less on restaurant meals and looking for bargains at the grocery store to help balance budgets.

"I base what we eat on what's on sale," says Howell, an administrative assistant who lives in Vinings. "Asparagus is on sale, so we're eating a lot of asparagus right now. We might eat meat twice a week now because it's gotten so expensive."

Similar cutbacks are showing up in everything from empty seats at high-end steakhouses to sparse collection barrels at canned-food drives. On the increase: Food stamp enrollment. Nearly 30,000 Georgians joined the rolls in 2007, with more than 1 in 10 residents receiving aid, a slight increase from 2006.

The Atlanta Community Food Bank distributed nearly 73,500 more pounds of food in February than it did during the same month in 2007, sending 1.25 million pounds to nonprofit agencies to distribute to the hungry. It is trying to balance the greater demand with a drop in donations of food and money, says executive director Bill Bolling.

The food bank is pursuing smaller donations that it once would have turned down, he says. But because of high fuel prices, it's declining donations that would cost too much in fuel to collect.

"We're having to work a lot harder to stay in place," Bolling says.

Cheap food is a staple of American life. Consumers spend just under 10 percent of their disposable income on food, less than in any other country, according to the federal agriculture department.

Prices are rising for many reasons, from higher fuel prices to increasing demand for food from booming regions like China, says Annette Clauson, an Agriculture Department economist.

Diverting corn to use for ethanol instead of food is another reason for the increase. Corn is a bedrock of the American diet, showing up in everything from livestock feed to processed foods such as soft drinks and spaghetti sauce.

With less corn available, prices rose for soybeans, used in livestock feed and cooking oil. The falling dollar also is making U.S. agricultural products more attractive internationally, with wheat fetching premium prices.

In 2007 dairy products, eggs and poultry notched the biggest price increases. In 2008 the big runups are predicted to come from oils and wheat-based items such as cereal, flour and bread. Prices are projected to rise another 3.5 percent to 4.5 percent this year, with cooking oils and bread increasing at nearly twice that rate.

Even with a 4 percent increase in 2007, food costs are still a small portion of total spending. But they're an area where consumers can change habits to save money.

Michael and Cheryl Norwood of Canton have felt the pinch and responded. They've replaced more expensive chicken breasts with chicken thighs, and traded the occasional filet mignon for New York strip. Cheryl Norwood searches for economy recipes online.

"Planning is one of the best things," she says. "One of the worst mistakes people make is they go to the store without a list."

Buying a house and paying more for gas convinced Drew Kleinhans of Roswell to give up the occasional splurge at upscale restaurants like the Dining Room at the Ritz-Carlton Buckhead. Now he looks for coupons for a nearby restaurant, where he can score a dinner for two with beer for less than $30.

"We've traded down," Kleinhans says. "The past few times we've gone out in Roswell have been at a little Mexican place around the corner."

Even quick-service restaurants are losing business, though. Frequent customers reported stopping in less often because of economic and health concerns, according to Sandelman & Associates, a Barrington, Ill.-based market research firm. To attract customers, fast food chains like McDonald's are focusing on their value menus. Others are heavily advertising lower-priced items, including Subway, Pizza Hut and Domino's Pizza, which next week will start offering three single-topping pizzas for $4 each.

Higher food and gas prices are reinforcing existing trends, like the movement toward big-box stores, store-brand products and meals eaten at home, market researchers say. Those factors are also causing consumers to clip coupons and choose less expensive varieties of food. At Publix, sales of chicken and hamburger meat are up and purchases of steak and other high-end meats are down, says spokeswoman Maria Brous.

Like other food sellers, Publix is looking for ways to reach out to consumers searching for value. It's including more staples in its buy-one, get-one-free specials, Brous says. Supermarkets and food manufacturers also are positioning themselves as an economical alternative to dining out.

At the same time, their prices are rising. The most recent to announce an increase was ConAgra Foods, maker of such brands as Healthy Choice, Chef Boyardee and Hunt's, which raised prices 5 percent on 95 percent of its products.

At the other end of the scale is Whippoorwill Hollow Farm, which sells organic eggs and produce at the Morningside Farmers Market. The price of a dozen eggs has risen from $4 to $6.50 because of skyrocketing feed prices, Andy Byrd says.

He's trying to hold the line on kale, carrots and other produce despite the rising cost of fertilizer, because he wants to encourage Atlantans to buy food grown close to home. A bag of arugula is still $3.

"We want to keep it affordable," Byrd says.

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