Karen Datko writing for “Your Money” warns the cost of one of the cheapest classic sandwiches — peanut butter and jelly — is about to skyrocket.
J.M. Smucker’s President and Chief Operating Officer Vince Byrd announced that the company is raising prices on Jif peanut butter products 30% starting in November due to a weak peanut crop that has sent costs higher. The company will also raise prices 4% on fruit jams in November.
“The 2011 crop is…challenged due to poor weather conditions,” Mr. Byrd said at a Barclays Capital consumer conference. “Our peanut costs will be significantly higher.”
Shelly Nutt, the executive director of the Texas Peanut Producers, told Fox news that the cost of peanut butter will be over $4 a jar when that price increase hits, and believes the price increase will apply to all peanut butter companies, not just Jif.
“I think that by December that everything related to peanuts and peanut butter is going to see an increase in price because there’s just not the peanuts out there to fill the demand. The supply isn’t here this year,” she said.
Nutt says peanut farmers are competing for land with cotton farmers, and the soil is dry because of the drought. Peanut shellers think yields are going to be reduced by 30 to 50 percent across the state.
“Input costs have gone up,” said Nutt, “which are diesel, irrigation costs, fertizlier costs, just general farm input costs have gone up. And then the drought impacting that, where their yields are less. So the farmers aren’t going to realize the increase price in their commodities this year.”
Fox News claims Texas peanut farms aren’t the only ones in short supply. Georgia, the nation’s number one peanut producer, is at it’s lowest level of peanuts in 30 years.
The drought will cause beef prices to soar as well. In July, 246 of Texas’s 254 counties were under a burn ban, forcing cattle owners to thin out their herds early and place cattle in feedlots where livestock are fattened for market before slaughter.
The drought is applying enormous stress to the US beef production system, while US exports are approaching all-time record levels.
Beef Central’s Jon Condon claims the high rate of cow liquidation and the shift of the feedlot inventory forward, from winter into the preceding winter/spring, causes a huge rise in beef prices, which almost doubled in some cases.