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March 21, 2014

Breakfast foods are getting pricier

(Continued)

NEW YORK —

Of course, people who need to get their caffeine fix won't be put off. Plus, coffee prices were at their lowest level in about seven years before they started climbing.

Starbucks customers also shouldn't worry. They won't be paying higher prices even if the cost of the beans keeps going up, says CEO Howard Schultz. The company has locked in its coffee bean prices for the next year using futures contracts.

ORANGE JUICE

Say squeeze when you pass the OJ.

Orange juice futures are up 12 percent this year, and climbed as high as $1.57 a pound March 6, their highest price in two years.

To be sure, moves in retail food prices won't match the wild jumps in commodities markets, says David Garfield, a consultant at AlixPartners who advises food-makers. The reason: food companies worry about losing market share and will absorb some of the higher costs rather than risk losing customers.

"People would be up in arms, if every time they went to the grocery store the prices of their preferred items were jumping up and down," says Garfield.

The price of a 12-ounce can of frozen orange juice edged up in February to $2.43 from $2.41 in January, according to government data.

A series of problems are driving the increases. Florida's orange crop is forecast to be the worst in almost a quarter of a century. A citrus greening disease, which is transmitted by tiny insects that feed on the leaves of oranges, is damaging the harvest. Infected trees start to produce bitter green fruit. The problem was first detected in the U.S. in September 2005 and the Florida orange juice crop is down by almost a quarter since then.

No cure is known, and the only solution is to cut down the tree.

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