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Prices rises squeeze food producers, retailers

A shopper chooses organic vegetables at a grocery store.

Jeremy Hobson: We'll get earnings this morning from ConAgra -- which makes packaged food products like Hunts Ketchup and Healthy Choice. That company is being squeezed by the rising cost of ingredients.

And as Marketplace's Alisa Roth reports, that squeeze is happening at every link in the food chain -- from farm to supermarket.


Alisa Roth: Carlos Hernandez says it's been costing him more and more to stock his supermarket near Miami. But he says he's been trying not to raise his prices. The competition is tough, and his customers are mostly from low-income households.

Carlos Hernandez: A lot of times, milk goes up four cents a gallon or five cents a gallon, 10 cents a gallon and we don't raise our prices.

It might not sound like much, but it adds up when you sell 800 gallons of milk a week. And when you're eating the margins on dozens of other products, too.

The price pressures in the grocery aisles are also preventing food companies like ConAgra and General Mills from passing on all of their increased costs.

Ricky Volpe is a research economist at the Department of Agriculture.

Ricky Volpe: We've seen an increase in fuel prices, which necessarily increases the transportation and the production costs for all these commodities.

The weak dollar and bad weather have also pushed food prices higher. Volpe says commodity prices should start dropping in the next few months. But it probably won't mean lower prices in the stores.

I'm Alisa Roth for Marketplace.

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