The national jobless rate ticked up to 7.3% in October, manufacturing growth was weaker than expected, and the Fed's threatening to raise interest rates -- but Americans have at least one reason to be thankful this Thursday: Thanksgiving dinner is getting cheaper.
According to the American Farm Bureau Federation, the average cost of a T-Day dinner for a (presumably extended) family of 10 will be nearly a full percentage point cheaper this year than last -- down $0.44 from $49.48 in 2012, to $49.04 this year. And for this, you can thank Tom Turkey.
For 28 years running, AFBF has calculated the cost of Thanksgiving Day dinner, assuming a traditional spread featuring "turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a relish tray of carrots and celery, pumpkin pie with whipped cream, and beverages of coffee and milk, all in quantities sufficient to serve a family of 10." Most years, the total cost runs in the neighborhood of $49 and change, sometimes higher, sometimes lower. This year, it's lower.
According to the AFBF, the cost of a 16-lb. bird will average $21.76 this year, down $0.47 from last year, thus accounting for more than the entire amount of the drop in price for a turkey dinner. That's probably bad news for turkey suppliers like Butterball (a joint venture between Maxwell Farms and Seaboard Corp. (NYSEMKT:SEB)). But it will be welcome news for consumers.
Side dishes falling in price include the cost of peas, cranberries, rolls, stuffing, and pie shells -- the latter three likely owing to a steep dive in the price of wheat, and bad news for grains processor Archer Daniels Midland (NYSE:ADM).
Conversely, slightly higher milk prices since last Thanksgiving are pushing up the cost of milk and whipping cream. Carrots and celery, canned pumpkin, and sweet potatoes are also on an upward march. Indeed, sweet potatoes are experiencing the sharpest hike in prices -- up nearly 7% from last year. That will be music to the ears of Dole shareholders, since that company sells 'em.
What's behind the changes?
Broadly speaking, declining grain prices appear to explain many of the shifts in cost. Corn prices are down significantly from where they sat a year ago, which may be having a beneficial effect on the price of turkey by reducing the cost of feed. Falling wheat prices, naturally, result in cheaper flour.
As for those troublesome sweet potatoes, there's a different dynamic at work. As reported in the summer 2013 issue of the National Sweet Potato Newsletter (yes, there is such a thing): Americans have become big fans of yams. Sweet potato consumption is up more than 50% since 1990, to 6.3 pounds per person. Meanwhile, the U.S. is now exporting huge amounts of the orange spuds. Exports are up "15-fold" to 230 million pounds.
At the same time, the amount of land devoted to sweet potato cultivation has dwindled. In Louisiana, a big sweet potato-producing state, acres under cultivation have dropped from 26,000 to just 8,000 over the past decade. The consequent reduction of sweet potato supply, combined with more Americans yearning for yams, is pushing prices up -- not enough to outweigh the benefits of cheaper turkey this year, but still enough to be significant.
The good news, though, is that by next week the crisis should pass, and most Americans can forget about sweet potatoes for another 12 months. Our love of turkey, meanwhile, should still be cheap to satisfy. So, go ahead and have another helping. It's cheap.