Rising Food Prices a 'True Crisis,' Congress Told

WASHINGTON — Hunger relief agencies "are facing a true crisis," a food bank official told Congress on Thursday at a hearing on the effect of rising food prices.

"Our network is overwhelmed" by requests for food from families facing job losses or home foreclosures, George Braley, senior vice president of America's Second Harvest, told Congress's Joint Economic Committee.

Meanwhile, flour is now so expensive that bakeries can't afford to donate bread, one baker testified.

In this election year, Senate and House committee members were eager to learn more about the causes and effects of food price inflation.

"When you walk down the street, you hear people complaining about food prices almost as much as gas prices," said Sen. Charles Schumer, D-N.Y., who chairs the joint committee.

Schumer predicted that soon, anxiety about food prices will "equal or surpass the anger and frustrations so many Americans have about higher gas prices."

His committee's researchers found that since March 2007, the average price of a dozen eggs is up nearly 30 percent to $2.20, and a gallon of milk is up 18.5 percent to $3.78. Such hikes are especially painful for households in the lowest fifth of incomes because, according to the committee's statistics, those families already are spending nearly one-third their income on food.

Braley said the food price hikes are crippling for low-income Americans because they are hitting just as gasoline costs are spiking too. With gasoline now at $3.60 a gallon, "families have less money," he said.

Richard Reinwald, the owner of Reinwald's Bakery in Huntington, N.Y., said he is forced to raise prices because a 100-pound bag of flour costs triple what it did two years ago. "My customers, I have to say, are frustrated," he said.

Reinwald, the bakery's third-generation owner, said that besides raising prices, he has had to lay off staff, cut hours of operation and curtail bread donations to the local food bank.

"Today I ask myself, what strategy will we use to survive this year — what will we do now?" he asked.

Joseph Glauber, the Agriculture Department's chief economist, predicted that food prices would jump as much as 5 percent this year. So far this year, consumer prices generally are rising at an annual rate of about 3 percent.

But Glauber said consumers shouldn't fear that food prices will continue to rise dramatically forever, because farmers will plant more crops.

"Yield growth and supply response both in the U.S. and abroad will help moderate crop prices in the long run," he said. But he conceded that for now, "tight supplies will keep markets volatile."

He said the reasons for higher food prices hikes include domestic and global economic growth, bad weather in some agricultural regions, rising energy costs, trade barriers, and the growing use of biofuels such as corn-based ethanol.

"Continued expansion of biofuels production will likely maintain corn and soybean prices at historically high levels," he said. That may soon translate into faster-rising meat prices, he predicted, because "livestock producers will adjust to the increase in feed costs by reducing production."

Ironically, the price spikes are highest for the most basic foods, such as rice, corn and bread. Processed foods are rising less quickly because most of their costs are tied to labor, energy, marketing and other factors besides the food itself.

"In contrast, food products that undergo little processing prior to being consumed, such as eggs and fresh fruits and vegetables, the farm value accounts for a much larger share of the retail value," Glauber said.

Rep. Jim Saxton, R-N.J., the committee's senior Republican, said that to lower food costs, Congress should institute "genuine reform" to end the "nightmare of wasteful, outdated (farm) subsidies."

Tom Buis, president of the National Farmers Union, said the "real culprit has to be energy," not excessive farm subsidies or profits.

"Everybody seems to be wanting to blame the farmer for everything bad happening in America and around the world," he said. But surging oil prices are driving up the cost of producing and delivering food, he said.

At the White House, President Bush proposed spending $770 million for emergency aid meant to help poor countries cope with spiraling food prices.

If Congress backs the increase — contained in a special $70 billion supplemental request to fund continuing fighting in Iraq and Afghanistan — it would bring total U.S. food assistance abroad to $2.3 billion this year.

"In some of the world's poorest nations, rising prices can mean the difference between getting a daily meal and going without food," said Bush, who two weeks ago released $200 million worth of emergency food aid.

Bob Deans of the Cox Newspapers Washington Bureau contributed to this article.