(Wall Street Journal) - Skyrocketing prices in the agricultural futures markets won't translate into as big a bump in food costs for consumers, U.S. Department of Agriculture Secretary Tom Vilsack said on Wednesday.

"I'm not sure that commodity prices necessarily translate directly and proportionately into food costs," Mr. Vilsack said in an interview, adding, "They go up and down all the time."

Prices for grains such as corn and soybeans soared to two-year highs in the futures market last week, while sugar prices spiked to a 30-year high. The gains were widely attributed to fears that harvests would be too small to comfortably meet rapidly growing demand from China and other emerging markets.

But farmers aren't reaping the full benefit of higher prices, and consumers don't pay the full cost, Mr. Vilsack said.

"There are a lot of people in the food chain that are taking a bite out of the apple," he said.

Food prices rose only 0.1% in October, the Labor Department said on Wednesday, even as corn futures shot up nearly 20% and sugar futures rose 15%. But large food producers, including General Mills Inc., have said recently that they will soon scale back promotions that have kept consumer prices subdued.

The USDA estimates food prices this year will rise by between 0.5% and 1.5%, the smallest increase since 1992, although the rate is expected to pick up to a more normal 2% to 3% in 2011.

Businesses across the agricultural sector also have low debt levels, making it easier to weather volatile markets, Mr. Vilsack said.

"If you're highly leveraged and you're basically banking on high commodity prices to get you out of a high leveraged circumstance, you're in big trouble," he said. "But if you've got $1 debt to $9 or $10 in asset value, you've got a little bit of time to deal with the vagaries of the market."

A "significant cushion" between debt and asset values should also keep rising farmland prices from turning into a bubble, Mr. Vilsack said. Prices for irrigated land in the western farm belt rose 9.6% in the third quarter, according to a survey put out last week by the Federal Reserve Bank of Kansas City.

The rapid rise has some observers concerned about the risk of an equally sharp correction, of the sort that has devastated housing prices.

"While the credit structure underlying U.S. farmland does not appear to involve excessive leverage or inappropriate loan products, this is a situation that will continue to require close monitoring," Sheila Bair, chairman of the Federal Deposit Insurance Corp., said last month.

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