Food Prices: Good for Farmers, Bad for Everybody Else

03/13/2012 12:15 pm ET

If you've been to the grocery store recently, you've probably noticed the jump in prices for some basic foods. Milk and meat have both gone up nearly 10 percent, while coffee increased 19 percent and peanut butter jumped up a whopping 27 percent, according to Time.com.

The rising prices are hard on many Americans already struggling through an economic recovery that so far hasn't translated to rising wages or salaries. A growing number of Americans can't afford food, according to one survey from the Food and Action Center. Millions of senior citizens are struggling to afford the basics.

Still, at least one group is benefiting from the increase in food costs: American farmers, who netted a record $98 billion last year, according to the Food and Agricultural Policy Research Institute.

"Over the last two, three years, the U.S. farm sector has been enjoying a banner year for incomes," said Jason Henderson, of the Kansas City Federal Reserve Bank, in an interview with National Public Radio.

The boom is due primarily to rising demand from abroad for American agricultural goods, and the increasing popularity of ethanol, a corn-based fuel, according to NPR. Specifically, China's nearly 1.5 billion citizens are buying more and more American farm products. While the booming ethanol market is making for happy farmers among those who grow corn.

"Oh yeah! Can't complain. Prices been real good," farmer Rick Kroll told NPR. "Crops ain't been bad either."

It's unclear how long farmers' good fortunes will last. While ethanol is booming, many farmers rely primarily on gasoline to fuel their machines, and with the recent spike in fuel prices, farmers fear their production costs are about to go up.

"Energy costs to a farmer are obviously a serious concern," said David Berg, president of the American Crystal Sugar Company, in an interview with Reuters. "It's almost like a few years ago where everyone was in a state of panic."

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