Fuel Costs Add to Shopping Woes

By Cochran, Diane

Dinner parties at Monita Nemitz’s house are rare events these days, and it’s not because she and her husband don’t enjoy hosting.

It’s because they can’t afford to cook for a group.

“Now when we invite people over, it’s a potluck” Nemitz said. “Everyone knows this situation is getting scary. … Our friends and family talk about it all the time.”

With retail food prices expected to rise as much as 5 percent over last year, families and business owners have begun crossing luxury items off their grocery lists and are looking for other ways to save.

Record-high fuel prices are adding to the crunch People are paying more at the pump and more at the grocery checkout because of them.

Almost half of the hike in food prices can be directly attributed to rising fuel costs, according to the American Farm Bureau Federation.

“We’re getting squeezed on all sides,” said Don Cantrell of Billings, who started shopping for groceries at discount stores like Mr. Thrifty Foods. “I didn’t used to compare shop, and now I do.”

Without the added burden of higher fuel costs, concern about food prices probably wouldn’t be so sharp.

Retail food prices have fluctuated steadily over the past 20 years, with prices going up and down between 1 percent and 5 percent a year, according to the Farm Bureau.

Still, some longtime observers of the global food market foresee serious trouble.

For years, Americans have spent a smaller proportion of their disposable incomes – about 10 percent – on food than have people in other countries, but that could change.

Indonesians spend 55 percent of their cash flow on groceries, te American Farm Bureau says. The rate is 26 percent in China and 15 percent in France.

“I am truly concerned this time because I don’t think this is a short-term event,” said Sam Hughes, the director of food and nutrition services at St. Vincent Healthcare and a 30-year veteran of the food service industry. “There is no way I see that this is going to go back down.”

Nemitz, who runs her own wedding cake business, also is worried about what the future holds, and she’s trying to stay a step ahead of the troubling changes.

She and her husband, Warren, an employee of Edwards Jet Center, plan to buy a second freezer to store beef and poultry from her father’s ranch as well as game meat, and they’ve talked with their adult children about planting a community vegetable garden next year.

This spring, the couple planted enough vegetables to feed themselves into the winter.

“What we’re trying to do is become as self-sufficient as possible,” she said.

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They aren’t the only ones.

At Jim’s Jungle, owner Jim Pottenger couldn’t keep vegetable starts in stock earlier this year.

“I have a feeling they’ll find there’s been more gardens put in this year than since the Victory Gardens of World War II,” Pottenger said.

For the first time in his seven years in the nursery business on Broadwater Avenue and 14th Street West, Pottenger said, his suppliers ran out of vegetable plants.

“I don’t know how many people have told me they dug out a section of grass and put in a garden,” he said. “Or they said, ‘I’m not going to plant flowers. I’m putting in vegetables.’ “

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Statistics from the state’s public-assistance programs also reflect consumers’ efforts to stretch dollars.

“Our offices are seeing increases in the number of denied applications for all our programs,” said Hank Hudson, administrator for the Human and Community Services Division of the state Department of Public Health and Human Services. “People are coming in who probably have never applied for any programs before. They’re exploring what’s available.”

Many are being denied because their incomes are too high to qualify for assistance, Hudson said. The unemployment rate remains historically low, and that means most people are working.

Paychecks from low-paying jobs might no longer reach far enough to cover higher expenses, but they still amount to too much income to qualify for help.

Meanwhile, resources for those who do get help have been stretched thin.

“We received a nice bump in our emergency food budget from the Farm Bill, but we’re going to end up with the same amount of food because of the increase in prices,” Hudson said. “It’s not going to equate to more food.”

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The Billings Food Bank, which buys wholesale food to supplement donations, feels the pinch, too.

A year ago, a case of macaroni and cheese – 24 boxes – cost $7.97, said executive director Sheryle Shandy. Today, the wholesale price is $20.64.

Shandy and Mary Sickle, head cook for the Yellowstone County Council on Aging, can each rattle off a dozen foodstuffs that have had similar show-stopping price hikes.

Sickle, who oversees the preparation of 400 meals a day, could get a gallon jar of mayonnaise for $5.09 in December. Now its $7.85. In the same time frame, a 25-pound sack of rice went from $14.77 to $18.96.

“How do we continue providing the same quality of service to (seniors) without raising the suggested contribution?” asked Bea Ann Melichar, Council on Aging’s executive director.

Seniors who eat at a Council on Aging meal site are asked to pay $3 for the meal. Melichar said the organization’s board of directors would consider raising that amount as it plans next year’s budget.

“We’ll probably also be looking at more fundraising,” she said. “But everyone’s being hit with the same increase in costs.”

At the food bank, strategic buying has kept the larder relatively full, and Shandy is confident that she can count on the community for extra donations should she need them.

And she might. As food prices climb, more new faces turn up in need of help.

“You don’t always ask, ‘What drove you here?’ but obviously gas and food are two big issues now,” Shandy said.

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Local restaurants are wrestling with the same challenges.

At Steiner’s Kit Kat in Worden, fewer diners are walking in the door.

“Last summer, we got a lot of traffic from Billings,” owner Chris Steiner said. “People have cut back on their trips.”

Combine that with having to pay more for ingredients and for delivery charges – most distributors have added fuel surcharges to their delivery fees – and times are tough for independent restaurateurs, Steiner said.

“We’ve raised our prices a little bit,” he said. “For the most part, we’ve taken the hit right in our shorts.”

Linda Frickel, the owner of the Owl Cafe in laurel, said her regular customers aren’t coming in as often.

“They can’t afford it,” Frickel said. “If they used to go out two to three times a week, they’ve cut that back to once, especially older people.”

Frickel has also watched the balance on her food and delivery bills steadily increase, and it’s about to get worse for small- restaurant owners, she said. The minimum wage is set to increase by 30 cents an hour on July 1.

“Something’s got to halt,” she said.

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At St. Vincent Healthcare, where 2,500 meats are prepared every day, food service workers save money by striving to eliminate waste. Ingredients for every recipe are carefully measured in a special ingredients room, and buyers shop around for the best prices.

Hughes, the food services director, has projected a 6 percent to 8 percent increase in his budget for next year. That’s twice the usual rate of inflation, although this year saw a big jump, too, he said.

From April 2007 to April 2008, the St. Vincent food budget increased by 5 percent.

Hughes said he looked back through 50 years of financial records, and the only other era that experienced such sharp increases was the late 1970s.

“It’s unheard of,” he said.

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Higher prices haven’t been easy on grocers.

At Good Earth Market, general manager Perry McNeese has raised retail prices only enough to keep up with the wholesale increases he is paying on the other end.

“We haven’t changed our margins,” McNeese said.

Costco is also laboring to maintain its margins. Innovators are bard at work designing new packaging to lighten shipping loads and reduce wasted space on pallets and in truth, said Bill McDonald, the general manager of the Billings store.

Packing Costco’s popular mixed nuts into square containers instead of round ones will save 1,300 truck trips a year among the company’s 500 stores, McDonald said.

That saves on transportation costs and allows outlets to keep their prices low, he said.

“We’re trying as much as we can to hold prices down,” McDonald said.

It seems to be working. Costco customers are buying more food than they used to.

“The trend we’re seeing is the average sale has increased,” McDonald said. Our foods business has dramatically increased, and our luxury items, like patio sets, have dropped a little bit People need to eat, They don’t need a patio set.”

Trends are also shifting at Evergreen IGA, where more customers are looking for deals.

“Our ad items have increased, so obviously they’re watching our ads closer,” said general manager Don Rickhoff.

As consumers look for some-thing to cut out of their budgets to accommodate higher fuel prices, grocery items are often the first to go, Rickhoff said.

“You can’t take it out of your mortgage or away from the power company,” he said.

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Some shoppers have discovered Mr. Thrifty Foods, a discount grocery store on North 14th Street downtown.

Mr. Thrifty’s shelves are filled with products that were overstocked at other stores, are near their sell-by date or have damaged packaging. A bottle of brand-name salad dressing goes for 50 cents. Cereal is $1.50 per box.

“We don’t mind a dent here or there,” said Cantrell, who was shopping recently for himself and his wife. “It still tastes OK.”

Mr. Thrifty moved last fall, and more people are shopping at the new store. But owner Larry Mathew said he doesn’t know if the influx of customers is because of a better location or more price- conscious shoppers.

“We get a lot of comments throughout the day, with gas prices the way they are, people are definitely trying to find any way they can to save money,” Mathew said.

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For Sandy Buchanan, who is on a fixed income because she has a compromised immune system and cannot work saving money at the grocery checkout means scaling back on fresh fruit and buying reduced-price meat.

“I’m eating a lot of beans,” said Buchanan, of Basin, Wyo. “I saw cherries at Wal-Mart the other day for almost $6 a pound, and I just laughed. That’s beyond outrageous.”

Buchanan said her budget has gotten so tight that she has begun looking for a cheaper place to live.

“I don’t know how I’ll afford the move,” she said. “The people who have money have no idea how it is for us who don’t have it.”

Copyright Billings Gazette Jun 28, 2008

(c) 2008 Billings Gazette, The. Provided by ProQuest Information and Learning. All rights Reserved.