Food experts predict steep rise in food prices for 2008 -- gas, food,housing, no jobs except Wal-Mar

WASHINGTON (Reuters) - Americans who dug deeper into their pockets for

groceries last year will face sticker shock again this year when

shopping for food, experts said on Thursday.

"There's going to be real food inflation in this country," C. Larry

Pope, president and chief executive of U.S. beef processor Smithfield

Foods Inc., said at the U.S. Agriculture Department's annual outlook

conference.

Prices of grain futures have surged lately. For example, wheat futures

have more than doubled on the Chicago Board of Trade over the last 12

months. Pope said meat shoppers eventually will pay for the rally

because farmers who raise livestock cannot absorb the sharp escalation

in feed costs.

Pope said the rip-roaring rallies in corn, soybeans and wheat would be

good for farmers, but are "scary" for companies like Smithfield and

the rest of the livestock industry.

"I think we need to tell the American consumer that things are going

up," he said in a speech. "We're seeing cost increases that we've

never seen in our business."

USDA Chief Economist Joseph Glauber forecast that consumer food prices

would rise 3.0 to 4.0 percent this year after a similar 4.0 percent

hike in 2007.

He added that "overall retail food prices for 2008 to 2010 are

expected to rise faster than the general inflation rate."

The spike in grains prices stems partly from the growing biofuels

industry, especially manufacturers of corn-based ethanol.

"While the ethanol boom can be expected to bring higher incomes to

farmers and reduce government outlays for farm programs, it also will

contribute to higher crop and livestock prices," said Glauber.

Robert Dineen, president and chief executive of the Renewable Fuels

Association, said the United States should not have to choose between

food and fuel supplies.

"We realize there are limitations from what we can produce from

grains," said Dineen, adding that makers of biofuel plan to expand

output from nonfood sources, so-called cellulosic materials such as

switchgrass and corn stalks and husks.

With more land being devoted to grains, an official of DuPont Co said

the company's biotech researchers already are developing the next

generation of seeds, which should lift yields for corn and soybeans.

Paul Schickler, a vice president at DuPont, said in the same

conference that the next breakthrough in seed technology should help

boost drought tolerance and hydrogen use efficiency.

This could boost yields by up to 40 percent in both grains in the

years ahead, he said.

(Editing by Russell Blinch and David Gregorio)

Source: Reuters US Online Report Domestic News