Basic food prices are expected to soar in the weeks ahead because of a wave of meat production cutbacks and higher producer costs -- two long-expected events made worse by unexpected summer drought.
After an immediate flurry of price hikes, the trend could level off -- possibly before the election on Nov. 4. But a new burst of price increases is predicted by economists for next year as the full brunt of production-cycle changes reaches the retail shelves.
Consumers are already facing significant price increases in the meat department. Broilers in particular are registering higher prices, but pork and beef also are up. Fresh fruit and vegetables are more expensive, too, partly because of seasonal variations.
Here is a summary of the food price productions of leading economists:
Food prices for consumers will rise between 8 and 9 percent during 1980. Most of the increase will occur during the next few months.
Although the summer drought damaged cornfields and killed chickens, the overall impact on food prices is marginal. One economist who had forecast an 8.4 percent increase in food prices for 1980 before the drought struck has since amended his prediction to 8.8 percent.
The increase in consumer food prices during 1981 might be 10 to 15 percent, based on preliminary indications.
The harbinger of the future arrived yesterday with the publication of the Producer Price Index, which showed a 9 percent increase in farm product prices from June to July.Wholesale food prices rose 3.8 percent, and food prices at the intermediate stage of production jumped 3.2 percent, according to the Labor Department index.
Economists said most of those higher producer prices would begin appearing in supermarkets within the next month. Some have already arrived.
The price of fresh fryers has increased 50 percent at many stores here since June 1, when hot dry weather began killing chickens on producer farms. Bacon has gone up 30 percent. And hamburger now costs 14 percent more than it did in May.
Government marketing specialists point to deliberate producer cutbacks as the primary reason for those increases.
"Producers have been hurting for six to nine months . . . because of low prices," said Ralph Tapp, a marketing specialist in the U.S. Department of Agriculture. He said farmers trimmed production to force up prices.
The production trend for broilers sent to market since mid-1979 illustrates the farmers' action, Tapp said. During the second quarter of 1979, broiler output was 12 percent over the previous year. But it has been dropping steadily in each quarter since then. Now, in the current quarter, broiler production is 4 percent below year-ago levels.
Tapp said the heat-related deaths of 8 million chickens this summer contributed to the production decline. But those deaths accounted for only a small portion of the drop, he said, noting that production would have been down about 3 percent, rather than 4 percent, if the weather had been normal.
Prices at the wholesale level have responded to the production cutbacks as intended, price surveys show. Broilers during the third quarter of this year averaged 50 cents a pound wholesale, compared to 41 cents a pound last quarter.
Retail prices for poultry have moved up accordingly. At Giant Supermarkets, for example, fresh fryers now sell for 73 cents a pound, compared to 49 cents a pound on June 1. Safeway stores have increased mixed fryer parts to 75 cents a pound, up from 49 cents a pound before. The increase for both chains is about 50 perent.
Similar cutbacks in hog and beef production have begun to push up those prices, too.
The American Meat Institute said yesterday that beef production during the second quarter of this year was 3 percent higher than the year before. During the third quarter, however, it is expected to drop to the 1979 production level. And during the fourth quarter, beef production will be 2 percent below the 1979 mark, the institute said.
Hog production drops are even more dramatic.
The institute's economist, Dr. Ewen Wilson, said that pork production during the second quarter was up 15 percent compared to 1979. But in the third quarter production will be up only 3 percent for hogs. And during the fourth quarter, it will fall to 2 percent below last year's levels.
Meantime, tighter supplies have begun pushing up prices for consumers.
One pound of Smok-A-Rama bacon at Safeway Supermarkets in the Washington area now costs $1.29, compared to 99 cents on June 1. And a pound of hamburger, which was $1.39 at Safeway on June 1, now costs $1.59.
Although the effect of the drought has been "overstated," according to Dr. Wilson, it has forced some changes in the beef cycle. How those changes will affect prices isn't certain yet, he said.
For example, total beef slaughters were higher in July than a year earlier.
But slaughters of animals coming from feedlots during July was down.
"That means that many of them (cattle) were going directly from the pasture to the slaughterhouse (rather than from pasture to feedlot to slaughterhouse)," Wilson said. He said that pattern could indicate distress sales by farmers confronted with damaged grazing land and increased grain costs.
High July slaughters could lead to a temporary increase in beef supplies and possibly a dip in wholesale prices, analysts said. But if that happened, it would be only one small footnote in the price increases resulting from the overall production cutbacks.
Fruits and vegetables also are rising in price -- but not in most cases because of the heat.
During June, fruits and vegetables rose 1.2 percent at Washington area grocery stores, according to the Consumer Price Index. Analysts blamed the increase on the higher prices of the new season's produce.
As a general rule, produce isn't grown commercially in any of the areas hit by the summer's dry heat wave. Moveover, major commercial produce suppliers have irrigation systems for those areas where hot dry weather is a threat.
A breakdown of the produce sold to Washington-Baltimore consumers shows that 28 percent comes from Florida, 21 percent from California, 6 percent from New York State, 4 percent from Maryland, and 2 percent from Virginia. The rest comes from a variety of regions in the assorted states.
Hardly any of those areas have suffered from drought this summer. But there has been some minimal weather effect.
Two examples cited by David Vaughn, a USDA marketing specialists, are watermelons and potatoes. "I haven't seen any shortage of melons, but they haven't been as cheap as usual," Vaughn said. He said the average price at the Laurel, Del., auction was $1.27 wholesale for a watermelon this week compared to $1.03 last year.
Potatoes also are more expensive this summer: $9 for 100 pounds at the Delaware wholesale market this week, compared to $3.50 a year ago.
"Potato growers have been losing money for several years so they planted less acreage this year," Vaughn said. Then, the crop was reduced further by the weather.
But some fruits and vegetables have remained plentiful and their wholesale price is about the same as last year.
Vaughn said California peaches that cost $4.80 for 22 pounds last year are now $5. New York sweet corn is $3.73 for a crate of about 5 dozen ears, compared to $3.65 last year.California tomatoes even registered a decline; $4.35 for one-half bushel wholesale this year compared to $6.80 a year ago.
"The prices jump all around," said Vaughn, "depending on the supply available."