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Consumers, producers feel effects of Mother Nature
LEXINGTON, Ky, (Jun 27, 2008)

While flood damage to crops in the Midwest is not yet calculated, consumers are dealing with the effects of inclement weather from around the world at the grocery store and could be for some time, said Larry Jones, agricultural economist with the University of Kentucky College of Agriculture.

"It looks like food prices this year are going to go up at least seven and maybe 8 percent, and that's due to a host of factors, which includes weather," he said. "I don't see any let up for the next year-and-a-half to 2 years."

Since last year, the average cost of food has increased about 5 percent. So far this year, the largest food sector increases are in fats and oils (12.8 percent), dairy and dairy products (11 percent) and cereals and bakery goods (10.5 percent).

 The Midwest is one of several areas in the world that had crops destroyed by extreme weather conditions. A cyclone caused catastrophic damage last month in Myanmar, and Australia is dealing with a 6-year drought.

These weather events are just one part of the cause of increasing food prices. The rising costs are also due to increased demand from growing economies wanting better diets, higher input costs and more demand for bioenergy production. The weakened dollar, which has caused higher import prices and increased U.S. exports, is another factor.

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