Record Wholesale Turkey Prices May Just Be the Beginning

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Generally speaking, it takes a while for monetary policies to have an impact upon consumers' wallets. But for families buying turkey this Thanksgiving, the effect of quantitative easing may be quick and unpleasant. Currently, wholesale turkey prices are hovering around $1.09 per pound, the highest they've ever reached. This represents a 28% increase over 2009's prices and a 37% increase over 2008's. While many retailers are selling birds below cost to draw in customers, fans of free range, organic or other specialty birds are likely to feel the bite.

Several factors have contributed to the rising price of turkeys, including the fact that they were undervalued in 2008. But one major factor may be quantitative easing. Trying to protect against deflation, the Federal Reserve poured money into the economy in 2009 and 2010. In the process, it spurred at least some inflation, particularly pushing up the prices of securities and commodities.

Among other things, the easy money resulted in more costly energy, which is used to raise turkeys, and oil, which is used to bring them to market. Because of corn-based ethanol production, the price of corn is tied to the price of oil, which means corn prices have also gone up by 47% in the last year. Since 70% of turkey feed is composed of corn, this has further fueled a rise in turkey costs.

Retailers Eat Rising Costs

To make things worse, as rising costs have narrowed profit margins, turkey production has fallen. According to the U.S. Department of Agriculture, turkey output has dropped from 5,663 million pounds in 2009 to 5,587 million pounds this year, about a 1% reduction. Stocks of frozen birds have also fallen: Between September and October of this year, 6% fewer turkeys made it into freezers. Since last year, the number of frozen turkeys has fallen by 23%.

Because of competition, many retailers have tried to keep turkey prices low, hoping that other Thanksgiving purchases will make up for the money they lose on birds. Even so, retail prices for turkey are up almost 8% over 2009, to their highest rate since 1980. So, even though grocery stores have tried to shield consumers from the highest turkey prices in history, the average pre-holiday price is still at a 30-year high.

As Daily Finance's Vishesh Kumar notes, the run-up in turkey prices are merely an early sign of rising prices for food, clothing and other consumer goods. According to the Agriculture Department, the overall food inflation rate between 2009 and 2010 was between 0.5 and 1.5%, the lowest annual increase since 1992. However, it also notes that rising commodity costs will probably result in further inflation. Its latest forecast calls for food costs rising 2% to 3% in the first half of 2011.

Looks like the shock of this year's pricey Thanksgiving will likely be repeated at Christmas, New Year's and Easter.

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murfsmurf4

On SS again, The cola has been a good thing for many years, it was giving people some kind of increase. Then comes along some Moron, no names please, who decides to elimanate FOOD and Fuel from the cost of Living average, What a great Idea. Without those costs being included, it is very hard to show any increase in the SS yearly benefits. The Moron that came up with that Idea???? Guess WHO???????

November 28 2010 at 8:15 PM Report abuse rate up rate down Reply
ajax

What are they talking about? I got mine for $5 at Safeway

November 28 2010 at 5:43 PM Report abuse rate up rate down Reply
mezl

considering people buy turkeys may be a few times a year, if not once a year, it's really not so bad..... may be each town should have its own turkey farm.. then people could just go pick up their birds with out having to go to a super market, and the turkeys wouldn't have to be transported any where - except to the dinner table......

November 28 2010 at 2:35 AM Report abuse rate up rate down Reply
douttfire

Buy your turkey NOW for Christmas. The grocery stores are throwing them at you for 48 cents a pound. Buy 2 or 3 and freeze them. I love these commentators...they live in a shoe box with a little tiny refrigerator that only holds bottled water. Then when they want a turkey, they head out to some hoity-toity celebrity organic market and get some free-range pampered pet and wonder WHY it's $10 a pound!!

November 27 2010 at 3:10 PM Report abuse rate up rate down Reply
tindlejsph

The best answer to this hog wash is to hunt em'!!!!

November 27 2010 at 2:49 PM Report abuse +1 rate up rate down Reply
KIDKATS

GO VEG THE HUMANE ALTERNATIVE. GOOD FOR OUR CONSCIENCE,HEALTH,ANIMALS,ENVIRONMENT

November 27 2010 at 10:03 AM Report abuse -3 rate up rate down Reply
1 reply to KIDKATS's comment
mezl

the last time i cut up a carrot i swear i heard it scream.... you do know that most produce is STILL ALIVE when it's boiled, cooked, baked or eaten raw at the table......

November 28 2010 at 2:37 AM Report abuse +1 rate up rate down Reply
saminhim

I WROTE MY SENATOR WEEKS AGO ABOUT FOOD PRICES GOING UP.MY POINT WAS TO GET AMERICA BACK INTO THE FOOD BUSINESS.THE IDEA WOULD TAKE OIL,GAS AND ELECTRIC COMPANIES OFF THE STOCK MARKET BECAUSE THEY ARE MONOPLIES.FOOD PRICES WOULD DROP DUE TO SUPPLIES.CHINA HAS CHEAP ELECTRIC CARS AND I AM SURE THAT ALL THE STOCK IN GM WILL SELL AND BECOME WORTHLESS.THE GOVERNMENT DON'T CARE BECAUSE THEY GOT RID OF THE STOCK.I WAS SURPRISED TO SEE WHO IS INVESTING IN CHINA'S AUTO INDUSTRY.COULD IT BE A REPUBLICAN?

November 26 2010 at 1:02 PM Report abuse rate up rate down Reply
nos2001

TO BILL, I KNOW OBAMACARE AND MEDICARE ARE TWO DIFFERENT THINGS. MY POINT IS-OBAMA HAS TAKEN 600 MILLION OF THE FUNDS IN MEDICARE WE PAID TO GIVE TO MEDICAID. POMPOUS ASS IS HE.....ADD TO THAT THE DEATH PANEL. IF I AND MY DAUGHTER NEED AN OPERATION, SHE WILL GET WHILE I GET PAIN PILLS. I HAVE LESS PRODUCTIVE YEARS SO THATS THE WAY IT WILL WORK HERE JUST LIKE IT IS IN ENGLAND.

November 26 2010 at 9:08 AM Report abuse +1 rate up rate down Reply
nos2001

NUTS, I BOUGHT OUR URKEY FOR .49 CENTS A POUND. THESE PRICES MUST BE FROM CALIFORNIA OR THE NORTHEAST. DON'T KNOW HOW ANYONE CAN AFFORD PRICES THERE. GAS FOOD TAXES ETC EVERYTHING IN THE LIBERAL ENCLAVES.

November 26 2010 at 9:04 AM Report abuse +2 rate up rate down Reply
GARY

Prices on everything are going up by the day and the tax cuts are going to expire in a month. What do you people think Obama is really up to here? This economy and the people will be begging at the freaks door soon if nothing changes and that is exactly what Soros/Obama want.

November 26 2010 at 1:58 AM Report abuse +4 rate up rate down Reply