by Samuel Weigley, 24/7 Wall St.
For the average American heading to the supermarket to buy Thanksgiving groceries, bringing a $50 bill should do the trick.
The average cost of a 10-serving Thanksgiving dinner will cost $49.48 this year, according to a study by the American Farm Bureau Federation, a nonprofit grassroots organization advocating farmer interests. The group relied on 150 volunteer-shoppers across the country to price out traditional Thanksgiving menu items including turkey, rolls and pumpkin pie.
With the United States having experienced its worst drought in decades this summer, there has been concern about rising food prices. Yet the price of a Thanksgiving dinner in 2012 increased just slightly from its cost of $49.20 in 2011. In fact, of the 11 items calculated by the AFBF for the dinner, eight got cheaper compared to last year, while only two became more expensive. The price of one -- a 1-pound celery and carrot relish tray -- was unchanged at 76 cents.
"All the talk that there has been about the drought ... sort of fed this expectation that we'd see a big jump in the Thanksgiving dinner price survey," AFBF Deputy Chief Economist John Anderson said in an interview, but added, "I'm not terribly surprised by this result."
Anderson noted that the drought effects haven't yet been evident in most retail prices yet, since decisions about pricing for Thanksgiving are often made "months, or at least weeks" in advance. The drought effects will hit consumers' wallets hardest the next three to six months, he added.
Prices in coming months also will be determined by other factors, including energy prices, the economy's overall strength, and Mother Nature's behavior.
Although the cost of a 10-person Thanksgiving dinner this year barely changed from 2011, it is significantly higher than in 2009, when it was $42.91 and $43.47 in 2010. Anderson says wholesale prices were rising during the most recent global recession, but retailers didn't have the pricing power to pass the costs to consumers.
"Consumers were just incredibly cost-conscious during the recession," Anderson said. By 2011, however, the economy was on strong enough footing that retailers began raising prices.
The items on the AFBF's Thanksgiving dinner cost report included a 16-pound turkey, 12 rolls, 1-pound relish tray of carrots and celery, one-half pint of whipping cream, 14 ounces of cubed stuffing, 3 pounds of sweet potatoes, 1 gallon of whole milk, 12 ounces of fresh cranberries, 1 pound of green peas, 30 ounces of pumpkin pie mix and 2 pie shells.
Here are the Thanksgiving items rising or falling in price.
1. Rolls (12) -- $2.33 in 2012 vs. $2.30 in 2011, 1.3% higher
Wheat prices have risen in recent months, which caused a supply shortage. The upcoming harvest season is not looking much better. Only 36% of this year's winter wheat was rated good or excellent - the quality most used for making wheat products. Last year, 50% of the wheat was rated good or excellent, according to the Department of Agriculture. Similarly, this year 22% of the wheat was rated poor or very poor compared to only 14% last year. Drought conditions in other countries, such Russia and Ukraine, also hurt crops, further pushing wheat prices higher.
2. Turkey (16 lb.) $22.23 in 2012 price vs. $21.57 in 2011, 3.1% higher
Prices have risen compared to last year due to droughts affecting the Midwest, which have increased the price of turkey feed. Worse, drought effects on turkey prices are expected to last through at least 2013. The increased turkey prices have left many charities hosting Thanksgiving dinners facing a turkey shortage.
1. Pie Shells -- two for $2.51 in 2012 price: vs. $2.52 in 2011, 0.4% lower
While the price of grains has been rising, that hasn't made it into packaged items such as pie shells yet - the price of pie shells actually dropped 1 cent year over year, based on the AFBF study. Anderson said that for many foods, notably packaged foods such as pie shells, the way major retail chains market the items and how much to stock on the shelves could lead to slight price fluctuations year over year.
2. Pumpkin Pie Mix (30 oz.) -- $3.02 in 2012 price vs. $3.03 in 2011, 0.3% lower
It was a mixed year for pumpkin producers in 2012. While some producers complained the national drought hurt their crop, others said the drought actually benefited them since pumpkins tend to thrive in warmer weather. Anderson pointed out that unlike major crops, such as corn and wheat, pumpkin production takes place on a much-smaller scale. This allows pumpkin growers to mitigate the effects of negative weather compared to other crop farmers. He also noted that pumpkin growing season takes place at different times depending on location, helping to spread out the risk of a bad season.
3. Green Peas (1 lb.) -- $1.66 in 2012 vs. $1.68 in 2011, 1.2% lower
It's been a good year for bean producers, which includes pea producers. Although the Department of Agriculture doesn't specifically track the production of green peas, it noted in a recent report that dry bean production is expected to be up 35% in 2012. In Michigan, where peas constitute roughly a third of all dry bean production in the state, yields are expected to rise a modest 4% in 2012.
4. Fresh Cranberries (12 oz.) -- $2.45 in 2012 vs. $2.48 in 2011, 1.2% lower
Although lower yields tend to lead to higher prices, this hasn't been the case with cranberries. Production of cranberries is projected to be slightly less than last year, according to the most recent estimates by the Department of Agriculture. Cranberry vines faced heat stress in parts of the country due to high temperatures in the summer. But other places had less problems. Wisconsin, which produces 57% of cranberries in the U.S., is on track to produce 2% more than in 2011. The Department noted that growers in Wisconsin "reported excellent pollination and limited impact from the summer's high temperatures and dry conditions."
5. Whole Milk (1 gallon) -- $3.59 in 2012 vs. $3.66 in 2011, 1.9% lower
Milk prices are lower than last year due to extra supply built up during last winter's mild temperatures. The low milk prices, along with the high feed costs, have put enormous financial pressure on dairies. Dozens of dairies located in California, the largest producer of dairy products in the U.S., have recently filed for bankruptcy. To combat the low prices, cows are now being slaughtered at high rates. Already, this has produced higher dairy prices the past few months and could lead to record dairy prices in 2013.
6. Sweet Potatoes (3 lbs.) -- $3.15 in 2012 price vs. $3.26 in 2011, 3.4% lower
Although the country's drought caused widespread crop damage, that hasn't been much of a problem for potato farmers. The Department of Agriculture notes that potato production is expected to grow nearly 7% this year. Idaho, where more than a third of the nation's potatoes are produced, increased production 11% in the fall season. The market value of the potatoes produced in 2012 is expected to rise nearly 10% to $4.4 billion.
7. Cubed Stuffing (14 oz.) -- $2.77 in 2012 vs. $2.88 in 2011, 3.8% lower
Anderson said it was hard to deduce much from an 11-cent decline. He noted that the value of the raw commodities in the stuffing play a small role in the overall cost of the stuffing, with costs such as packaging, transportation and marketing playing a larger role. He suspects the price drop has a lot to do with retailers heavily promoting stuffing.
8. Whipping cream (½ pint) -- $1.83 in 2012 price vs. $1.96 in 2011, 6.6% lower
Of all the Thanksgiving items, the price of whipping cream has declined more than any other, which can be attributed to the price of dairy products. Although fluid milk prices have begun rising due to cow slaughtering, those prices have yet to be reflected in packaged food. But this won't last forever. The Department of Agriculture predicts the higher prices will be fully reflected the next 10 to 12 months.
Data from the Department of Agriculture was considered to identify changes in production for various commodities to determine why food prices may have changed. Some miscellaneous ingredients were not included because the measured amount needed was too small to impact the overall cost.
Weigley writes for 24/7Wall St., a financial news website.
Copyright 2012 USATODAY.com