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DOCUMENT RESUHE
07041 - [B2567586]
What Causes Food PiAces To Rise? What Can Be Done about It?
CED-78-170; B-114824. September 8, 1978. 114 pp. + 6 appendices
(40 pp.).
Report to the Congress; by Elmer B. Staats, Comptroller General.
Issue Area: Fooa: Federal Nutritional Standards (1708).
Contact: Commanity and Economic Development Div.
Budg,3t Function: Commerce ad Transportation: Ground
Transportation (404); Agriculture: Farm Income Stabilization
(351).
Organizaticn Concerned: Department of Agriculture; Department of
Transportation; Department of Labor; ILterstaZe Commerce
Commission; Bureau of Labor Statistics.
Congressional Relevance: House Committee on Agriculture; Senate
Committee on Agriculture, Nutrition, and Forestry; Congress.
Au'-.eority: Agricultural Act of 1970 (84 Stat. 1358). Agriculture
and Consumer Protection Act of 1973 (87 Stat. 221). Food and
Agriculture Act of 1977 (P.I. 93-113; 91 Stat. 913).
Agricultural Marketing Agreement Act of 1937, as amended (7
U.S.C. 601). Parmer-to-CoLsumer Direct Marketing Act of
1976. Interstate Commerce Act. Fair Packaging and Labeling
Act. Federal Food, Drug, and Cosmetic Act. P.L. 94-463. 90
Stat. 1982. 49 U.S.C. 303(b). 15 U.S.C. 1451. 21 U.S.C. 301,
H.R. 12101 (95th Cong.). H.B. 256 (95th Cong.). B.R. 497
(95th Cong.). H.R. 3132 (95th Cong.). H.I. 71 (95th Cong.).
H.RB. 902 (95th Cot,.). H.R. 4279 (95th Cong.). R.I. 4280
(95th Cong.). H.R. 4590 (95th Cong.). S. 1223 (95th Cong.).
S. 1835 (95th Conq.). =29 C.F.R. 1910.
According to the Bureau of Labor Statistics (BLS , food
price levels increased 57% from the beginning of 1970 t'rough
1976, including a 31% increase in 1973 and 1974. The Consumer
Price Index shows that over the la-t 50 Tears fcod prices ha,-e
been suscepti.ble to wider fluctuations than the prices of other
goods. Farm prices and food prices are generally genetated in
two differen4 markets--the market for raw agricultural
c..modities and .he market for finished food products.
Findings/Conclusions: Farm prices of raw agricultural
coam-dities are influenced largely by such unpredictable natural
forces as the weather, pests, and crop disease. Fare and food
prices are influenced by other factors that affect supply such
as Federal programs for cropland set-aside, commodity dispcsal,
export sales, and marketing o.ders: production costs, and the
length of the production cycle. Higher marketing charges have
accounted for 87% of the increase in consumer expenditures since
1973. The largest food carketing cost is labor. There are four
principal reasons why food prices do not always decline when the
farmer receives less for the raw commodity: (1) a drop in farm
value may have little or no impact on the retail price when the
farm value is a small percentage of a productls price; (2) a](ViewImageLocal?handle=hein.gao/gaobaaxwh0001&div=1&collection=&method=preview&ext=.png&size=3)