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Inflation effect
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Debra Ayona's husband and son love to drink milk. They often drink a gallon of it a day. But with milk nearing $6 a gallon, Ayona said she has had to cut her men down to two gallons a week and this former diet staple has become somewhat of a luxury item in her household.

Spurred by a number of factors, including higher energy costs, a corn ethanol boom and the evolving appetites of developing nations, inflation has hit many Newton County residents hard, especially at the gas pump and supermarket.

Ayona, shopping at the Kroger on U.S. Highway 278 on Thursday, said she now buys less meat and fewer dairy products, items that have increased by 3.8 percent and 11 percent respectively since last March, according to the Consumer Price Index.

Overall, inflation has increased by 4 percent since last March according to the CPI, which is a measure of the average change in prices over time of goods and services purchased by households. The CPI is published by the United States Department of Labor's Bureau of Labor Statistics.

The rate of inflation for food and beverages has increased by 4.4 percent since last year. The United States Department of Agriculture estimates that the rate will increase to 4.5 percent by year's end, making it the highest increase in 20 years.

Transportation costs and energy costs have increased even more since last year at 8.2 percent and 17 percent respectively.

Newton County resident Richard Dodd, who describes himself as comfortably retired, said the rising food prices haven't impacted him too much yet - especially since many of the food groups which have experienced the highest increases, meat and dairy, are ones that are not a part of his central diet.

 Still Dodd said he continues to buy store brand products to save money.

"We try to be careful with our spending and not be outrageous," Dodd said.

Last week gasoline prices rose to more than $3.50 a gallon in Covington. Statewide the average price rose to $3.57, according to the American Automobile Association. Fond memories of summer 2006 when gasoline was still below $2 a gallon are quickly becoming a distant memory for Newton County drivers.

"In just four years, the cost of petroleum has about tripled," said John McKissick, a professor of economics and the director of the Center of Agribusiness and Economic Development at UGA.

McKissick said that higher energy prices are also impacting the price of food, as costs for transporting and processing it become higher, resulting in higher production costs, which are passed on to the consumer.

Covington resident Ruth Crowe said she has had to stop driving as much as she used to because of the high price of gasoline.

 She has also had to readjust her diet. Crowe said she no longer goes out to eat as much and is buying food products that as a diabetic she knows she shouldn't such as white bread instead of wheat. On a fixed income, Crowe said she has little alternative.

"Every time I come [to the grocery store], it gets higher," said Crowe of rising food costs.

Crowe is hardly alone in her predicament. A large number of Georgia households have found it impossible to keep up with the rising cost of food.

 In 2008, nearly 16,400 new Georgia households qualified to receive food stamps, bringing the total number of residents receiving food aid to 986,245 or slightly more than 10 percent of the state's population, according to the Georgia Division of Family and Children Services.

What's causing the rise?

A number of factors have joined together to push the cost of food up, but probably none more so than corn-based ethanol. In 2006, corn ethanol subsidies amounted to $1.45 per gallon of ethanol produced for a total of $7 billion, according to, a Web site run by economist Steve Stoft.

The profitability of growing corn for ethanol has led many American farmers to convert their fields to corn production and other corn growers to stop growing corn for human and animal consumption. The switch has caused leading corn prices to nearly double in the last year and a half, according to Ephraim Leibtag, an economist with the Economic Research Service, a division of USDA.

According to McKissick, about one out of every four acres of agricultural land in the U.S. is now used for growing corn. This has led to price impacts on all grain products, not just corn. Commodity prices for two of Georgia's chief crops - peanuts and cotton - have also risen as a result.

"There's a competition for limited acreage in the U.S.," McKissick said. "We have taken 25 percent of the corn that used to go to feed animals and now we're making biofuels out of it rather than putting it in our mouth."

The changing appetites of newly prosperous people in the developing world are also impacting food prices domestically.

"That's a longer term impact and has been ongoing as nations improve their economy and their consumers have more income to spend," McKissick said. "They tend to spend that [new wealth] on higher protein diets, which usually includes more meat and is one of our big export products."

A higher demand for meat internationally, coupled with higher feed prices as a result of corn ethanol production, has resulted and will continue to result in higher prices for such American diet staples as beef, pork, poultry, milk and cheese.

Longer production cycles for meat mean higher prices for it are still to come, especially for beef as it has the longest production cycle of all the main sources of animal protein.

"You don't change meat supplies over night," McKissick said. "They're long production cycles. We won't feel the impact on the animal product side really until later in the year."

According to McKissick, chicken farmers in Georgia who make up the state's single largest agriculture industry have experienced a 40 percent increase in production costs.

The weakening value of the dollar is another part of the equation pushing food inflation up as more American farmers take advantage of the developing world's hunger for its agriculture exports.

"That does make the things that we import more expensive but the things that we export less expensive," McKissick said. "A weaker dollar means more American companies are exporting food to [other] countries, which bids up internal prices."

Leibtag predicted that once the technology for cellulose ethanol improves it would be natural for ethanol production to abandon corn, thus lowering one of the price pressures on the crop.

"Certainly there are better ways to make ethanol," Leibtag said.

While McKissick said that food prices will eventually fall, he doesn't expect any real price declines this year due to the higher dairy and meat prices expected later in the fall and winter.

In the meantime, American consumers are advised to tighten their budgets and cut back on non-necessities, Leibtag said.