Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=211031
Story Retrieval Date: 9/1/2014 1:36:09 PM CST
Chicagoan Elizabeth Ward is getting ready to make Thanksgiving dinner for her entire family again this year. And though the economy may be a bit better than last year, Ward said she’s still going to be mindful of prices and look for the best deals.
“We always do a turkey, I guess, because it’s better for you, and also we just always have it,” said Ward. “I’m always looking for coupons and sales, though, when I shop.”
While Ward and other consumers are still pinching pennies, the price of Thanksgiving dinner is increasing less than 1 percent this year after last year’s 13 percent spike, according to the American Farm Bureau Federation. The small increase is a surprise for some because the summer drought caused feed prices to rise by double digits.
The federation’s survey of the “Classic Thanksgiving Dinner” found that this year’s feast will cost $49.48, a 28-cent increase from 2011. In the past six years, Thanksgiving dinner costs have risen $11.38, or about 29 percent.
Higher meat prices are a major reason for the increase again this year. Turkey remains the major expense in the meal, costing an average of $1.39 per pound, about 4 cents more than 2011.
But the good news for families is leaving retailers and farmers with quite the stomachache.
With a still slowly growing economy, producers and retailers are absorbing cost increases to keep cautious customers happy. Losses this year for producers stem from the higher cost of keeping animals as well as higher labor costs.
“Retailers in general always have shown a resistance passing price increases along to customers, and we see that again this year,” said Greg Wagner, a commodities analyst at GWX Ag-Advisors. “Consumers benefit this year from that. And retailers are going to be loss leaders and try to make up in the other categories.”
Howard Kauffman Turkey Farms, known locally as Ho-Ka farms, a small family managed turkey farm in Waterman, Ill., produces around 75,000 birds annually. He had to raise prices about 8 percent to help cover a 50 percent increase in feed cost and labor costs this year. He still expects to take a loss.
“Demand for us has stayed the same, but we haven’t had a lot of resistance to raising prices. The media coverage of the drought, I think, helped make people aware of the prices and challenges,” said Tom Klopfenstein, farm manager at Ho-Ka.
Meat prices have been on an interesting ride in 2012. Historically, beef prices fall at the end of the year because consumer demand spikes for Christmas hams and Thanksgiving turkeys. But this year, meat prices are higher because of the impact of the drought, and they are expected to increase further..
“Right now the whole price just pivots around all these economic considerations but mostly if consumers have disposable income,” said Wagner. “Things that are impacting prices right now are gas prices, how comfortable people are with the economy, the ability of retailers to absorb cost or pass on cost."
For Chicago consumers, turkey still reigns supreme at Thanksgiving.
“We always have a turkey. I guess it’s just our tradition,” said Chicagoan Ray Spikerman, who will spend his Thanksgiving working at O’Hare International Airport. “We watch how much we spend, but we also weren’t ever extravagant. So we are just mindful.”