toledoblade.com --

The falling value of the U.S. dollar is contributing to a rise in food prices, particularly with imported foods such as fruit from Spain. A gallon of whole milk that sold for $2.78 in January 2000 costs around $3.95 today.

Eggs were 97 cents at the dawn of the new millennium. Now they're $2.49 a dozen.

Fresh whole chicken prices jumped from $1.05 to $1.49 a pound in the same time frame.

"A lot of that is attributed to the declining dollar," said P.J. DiNuzzo, president of DiNuzzo Investment Advisors Inc. in Beaver, Pa. "The weaker currency is having an effect all across the board, all the way to food prices."

The falling U.S. dollar isn't the only culprit. The rush for biofuels and record-setting oil prices also appear to be having a ripple effect on food prices.

According to the Consumer Price Index, the price of food on average has gone up 5.4 percent between November 2006 and November 2007, the latest figures available. The cost of dairy and related products has soared 14 percent, while the cost of meat and fish has gone up 4.1 percent, and the cost of bread has risen 8.1 percent.

"In general, food prices will continue to go higher as the dollar weakens," said Greg Womack, a financial planner with Womack Investment Advisers in Edmond, Okla.

A growing middle class in developing countries such as Latin America and Asia can afford more meat and milk, raising world demand and thus prices.

Produce, shown here in a Connecticut store, rose 1.7% last month, its biggest rise in 14 years.

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Also, the new federal energy bill calling for a sevenfold increase in ethanol production to meet clean air standards and reduce dependence on imported petroleum may be having the unintended consequence of causing shortages of corn - which is used in ethanol production - in turn driving up the prices of a wide array of food products derived from corn.

By 2012, the U.S. goal is to produce 7.5 billion gallons of ethanol a year, meaning U.S. annual corn production must rise 22 percent from about 10.9 billion bushels to 13.5 billion bushels to meet the demand.

Corn prices are at their highest level since the drought of 1995, jumping from around $2.18 per bushel in 2002 to $4.78 per bushel this week.

Beyond U.S. borders, the sharp rise corn prices recently led Mexicans to demonstrate in the streets of their capital over the skyrocketing price of corn tortilla, a staple of their diet.

Corn also is an essential feed ingredient for livestock and poultry producers, so as the price goes up it becomes more expensive to feed farm animals, which increases the cost consumers pay for chicken, eggs, ham, bacon, and other meats.

"Agronomically speaking, we are a 'corn' nation," said Paul Brahim, executive vice president of BPU Investment Management in Pittsburgh.

"Cows, sheep, hogs, chickens and people eat corn. Additionally, corn by-products such as corn oils and corn syrups are used in food processing. If you're a label reader, you'll see they're in just about every baked good and processed food in the grocery store."

The strong relationship between higher oil prices and the rising cost of getting food to market also is causing pressure on food prices, said Robert Dye, a senior economist for PNC Financial Services Group.

"Transportation of food is an issue because so much food is shipped by truck," Dyer said. "Higher diesel costs would be passed through to customers."

The Block News Alliance consists of The Blade and the Pittsburgh Post-Gazette.

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