Anyone who witnessed the browned and stunted farm fields in
drought-stricken states over the summer could tell you that this
year's harvest won't be up to par. Smaller yields in the U.S. will
likely lead to a bump in prices on supermarket shelves in the
coming year.
SEE ALSO:
Save Money on Groceries Without Coupons
The U.S. Department of Agriculture recently predicted that
higher crop prices would push prices for fats and oils up by as
much as 5% this year and prices for cereals and bakery products up
by as much as 4% in 2013. Prices for dairy products, poultry, pork
and beef are also expected to spike. Cows produce less milk in
extreme heat, and higher prices for corn and soybeans make it more
costly to feed livestock. But shoppers who make space in their
freezers and pantries now will find a silver lining. As cattle
become too expensive for farmers to feed, more cows are going to
slaughter early. That means beef supplies will increase for the
short term, causing prices to dip temporarily before shooting up as
supplies eventually decrease. More modest price hikes for processed
foods won't hit fully until well into 2013. But stockpiling now
could help you avoid paying more later.
Stephanie Nelson, founder of
CouponMom.com
, suggests being flexible about what you buy. Prices on frozen
foods may run lower than fresh. Purchasing a large cut of meat and
having the store's butcher break it down could save you 50% per
pound.
Want to offset the cash you leak at the grocery store? Consider
investing in an exchange-traded fund linked broadly to agriculture
production, such as Market Vectors Agribusiness ETF (symbol
MOO
). The fund's holdings, such as Monsanto and Potash Corp. of
Saskatchewan, could benefit as farmers purchase drought-resistant
seeds or more fertilizer to coax yield out of surviving plants,
says Dave Nadig, director of research for IndexUniverse.
This article first appeared in Kiplinger's Personal Finance
magazine. For more help with your personal finances and
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