The U.S.Department of Agriculture has confirmed what you likely already know: Food prices are on the rise. In January, the department forecast a price increase of 2.5% for 2011; last week, they upped that to between 3% and 4%.

We're expected to see the bulk of that increase toward the second half of the year, but you -- the consumers -- know it's already pretty evident: Major food manufacturers like Sara Lee (SLE) and ConAgra (CAG) are starting to increase prices on items such as frozen meals and deli meats. And other companies, like Kraft (KFT), may reduce the size of packaging to cut costs.

All this translates to a higher grocery bill for you.

What is driving these price hikes? I'm not just talking about the soaring gas prices we've been shaking our heads over. Beginning in July of last year, we also started to see a pretty sharp increase in corn prices, according to Darrel Good, an agricultural economist and professor at the University of Illinois.

"The price of corn has basically doubled since the end of June last year," Good says. "There are three or four factors that are fundamental to rising prices, but first and foremost, crop problems resulted in a smaller-than-expected output." We also saw a rapid expansion in demand due primarily to corn's use in ethanol.

But corn's not the only problem. There's been an increased demand for soybeans. Meat prices, too, are headed up, because of large price increases for livestock cattle and hogs. Producers of livestock have been slowly losing money, so they've reduced supply. And as basic college economics taught us, when the supply is down, prices go up.

So the question is, how do you cope? I have four suggestions:

Adjust Your Budget
Darrel Good says whether prices will continue to rise depends on what happens to crop production in 2011 -- if we have a favorable growing season, we can replenish some of that lost inventory. If prices do stay up, the cost of living will take a hit. If your budget is already stretched by gas prices, these price increases are going to push it even further, which means you may be faced with hard choices when it comes to discretionary spending: eating out, entertainment, new high-tech toys.

It's time to go over your budget and see where you can cut back (cable and cell phone are always good places to start -- these companies are typically negotiable). Then put a hold on major purchases to give yourself a chance to adjust.

Shop Smarter
This means making a plan -- and a list -- before you leave for the grocery store, so you know exactly what you're buying. Take some time to survey your stock: Know what you have and what you need. Limit impulse purchases. It helps to make one big shopping trip each week, rather than several. That way, you only have to walk past the magazines, candy bars and exotic fruit once.

Dedicate yourself to clipping coupons (worth a valuable $1.12 apiece on average) for things you regularly buy and need, and buy things when they're on sale, particularly non-perishables. Give store brands another look. And compare prices between stores, because you might be surprised. Wegman's, for instance, announced earlier this year that they wouldn't be raising prices on 40 staple products in 2011, despite rising commodity prices. Bananas, orange juice, tuna, cereal and frozen vegetables are on their list.

Compare Unit Prices
This is particularly important now that package sizes are shrinking: You need to get into the habit of looking at not only the retail price, but also the unit price. This will show you how much you're paying per ounce, pound, quart or other measurement, so you can compare products of different sizes and see where the best deal is. Often -- but not always -- you'll save by buying larger sizes, so pay attention.

Avoid Processed Foods

The further your food is from the original source -- and the more it's processed and packaged -- the more you'll pay for it as a general rule. That's why you'll often see price hikes in the inner aisles of the grocery store, where all the cookies, crackers, TV dinners and boxed meals live. (Corn and soy are popular ingredients in these foods, whether in the form of soybean oil, soy protein, corn syrup or maltodextrin.)

If you stick to the outer aisles -- or shop at a farmer's market come spring, where prices don't reflect gas costs to truck food across the country -- you may not be hit quite as hard.


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cccentar

The Government cut off the water supply to the San Joaquin Valley CA irrigation system where 25-40% of total production of some food items are produced in the U.S...one of the world's most productive areas! Thousands of acres of productive farmland were shut down by the OBama administration and a horrific economic situation was created for the residents of the area due to the lack of water.

And why did this happen?...a tiny 1 inch fish would be harmed!!! (At least this is what OBama tells us). Any question that high food costs are MAN-MADE?

March 14 2011 at 2:40 PM Report abuse +2 rate up rate down Reply
cccentar

Just gleaning from the information in the corresponding article, the high cost of food is MAN-MADE!!! OBama has his grandiose idea that sequestering corn production for ethanol production and restricting farmland utilization for other food staples will somehow benefit America. What a bonehead idea!

Let's see what we already know: 1.Ethanol uses more energy to produce than is created. 2.Ethanol is more polluting than gasoline. 3.Ethanol deteriorates the internal portions of an automobile's engine over time. 4.Increasing corn production for ethanol and reducing the growing of other food staples not only increases the price of corn, but every other food item we consume. 4.Farmers are mandated to grow their produce according to Government programs or face the loss of their taxpayer subsidies. 5. THERE ARE ALTERNATIVES TO CORN THAT CAN PRODUCE ETHANOL!!! 6. Ethanol costs more per energy unit than gasoline.7.Interference by the Government in normal supply and demand market forces usually creates turmoil and "unintended consequences".8.Taxpayer money is used to subsidize the ethanol production, thus our hard-earned money paying for high food costs go to support the creators of the problem!!! Go Figure!!

The next time you go food shopping and get smitten with Sticker Shock, please leave a message at the local Golf Course or Basketball Court and let Mr. OBama know what your thoughts are.

March 14 2011 at 2:19 PM Report abuse +1 rate up rate down Reply
edzelnis

The single biggest factor in rising food prices is actually commodities speculation by the big banking interests. Using their covertly obtained "exceptions" to laws limiting the amount of speculative money in the commodities market, 19 large banks have flooded the market with cash.
Their primary intent seems to be to take long positions on oil prices, but, in fact, they generally buy a basket of futures which encompasses a wide variety of commodities. Since the housing bubble burst, long money has been flooding into the commodities markets, driving the price of everything up. As a result, 100,000,000 new people worldwide are now categorized as "starving" because the can no longer afford the price of food.

March 14 2011 at 12:23 AM Report abuse +1 rate up rate down Reply
ectullis

Lose weight. We're too fat as it is.

March 13 2011 at 11:40 PM Report abuse -1 rate up rate down Reply
1 reply to ectullis's comment
cccentar

It's a good idea and I agree...BUT...a dinner at a fast food establishment nowadays in many cases costs a lot less than providing yourself a "healthy" meal. The Government got us going both ways!

March 14 2011 at 1:24 PM Report abuse +1 rate up rate down Reply
SPQR

I disagree with the article. We are being screwed and looking for bargains is not going to help. Stop eating and the prices will come down. I see the fat pigs buying tons of food at the store that they will toss half of it. Just buy what you need and forget stockpiling. It all goes to hell in 6 months anyway frozen or not. American s lose some weight !!!! you will need to when Mexico invades backed by the Chinese

March 13 2011 at 11:25 PM Report abuse -1 rate up rate down Reply
tomgold125

We've got to get Obama out of the white house. He's in way over his head. The
liberal media got Obama elected.

March 13 2011 at 11:01 PM Report abuse +1 rate up rate down Reply
cheryljim430

People on social security haven't had a raise in 2 years, prices keeps going up
move over kitty cat we may be eating with you.

March 13 2011 at 10:33 PM Report abuse +3 rate up rate down Reply
1 reply to cheryljim430's comment
patck7gw

No cost of living increase in social security, or military retirement, or government pensions. Although costs for food and energy is skyrocketing! The Obama side has made sure this is not counted in determining cost of living, if eating and heating you house is not cost of living then what is??? The retired are getting screwed over the shaft because of Obama and his lame administration hot shot ideas. Trillions in debt and old people have to worry about eating and heating their homes...disgusting!!. The gas prices are over $4.00 a gallon where I live, and no hope for that problem to go away.Looks like we will be up to $5.00 to $6.00 by summer. Write you congressmen, only hope we have.

March 14 2011 at 3:20 AM Report abuse rate up rate down Reply
bjohnsjohn

I forgot to add: I was a democrat for fifty years and was not crazy about the Republicans so I am now an Independent.

March 13 2011 at 8:55 PM Report abuse rate up rate down Reply
2 replies to bjohnsjohn's comment
kenszatmary

there are no more democrats, only socialists & comunists

March 13 2011 at 10:39 PM Report abuse +4 rate up rate down Reply
dterraman

two sides of the same coin

March 14 2011 at 5:50 AM Report abuse rate up rate down Reply
bjohnsjohn

All this talk is for naught. When you have a president that is illegeal, a muslin, a socialist/fascist with ties to radicals and a cabinet made up of criminals, are you surprised at the state of our country? He wants to bring us to our knees so the government will rule. And to think that the liberal Democrats are so evil that they aid him in the downfall of our democracy. All I have said I truly believe.

March 13 2011 at 8:53 PM Report abuse +2 rate up rate down Reply
Greg

Google....THE MADNESS OF A LOST SOCIETY ~~~~~ Also......THE MADNESS OF A LOST SOCIETY 2:FINAL WARNINGS. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ www.infowars.com.

March 13 2011 at 7:34 PM Report abuse rate up rate down Reply