(Oct. 3, 1:32 p.m.) Nervous consumers may trade down to less expensive fruits and vegetables in response to black news from Wall Street, but industry observers say there is only so far shoppers will go.

“I listened to a lot of the news, and I didn’t hear one single person say, ‘I’ve decided I’m going to stop eating,’” said John Stanton, food marketing professor at St. Joseph’s University, Philadelphia. “In the worst-case scenario, people trade down.”

Consumers who are wary of the credit crunch on Wall Street may cut back on their spending even if they are not directly affected, Stanton said.

“Their job might be secure,” he said. “They may have their investments in certificates of deposits that are safe, even those people may say, ‘Things are pretty bad. I better cut back.’ The most typical reaction is trading down. You find that people, instead of buying the sirloin steaks, will buy the chuck steaks, those kinds of things.”

Conservative industry loans

In terms of commercial operations, Desmond O’Rourke, economist and president of Belrose Inc., Pullman, Wash., said agricultural lending to growers in the Northwest U.S. doesn’t seem to be changed so far by the credit crisis on Wall Street.

“Right now it looks like there are no visible signs,” he said.

O’Rourke said the generally strong recent profitably of the apple industry helps growers obtain credit when they need it.

Maureen Marshall, vice president of Torrey Farms Inc., Elba, N.Y., said that growers there have two strong community banks to draw on. Those banks, she said, were not heavily invested in any of the subprime mortgages or other risky financial instruments. What’s more, she said most growers are conservative with borrowing and not in highly leveraged positions.

“Our biggest problem is the increase in our input costs, and that has been, for the whole year, a nightmare,” Marshall said.

However, she said consumer demand for commodities does seem to have fallen off. While typically there is increased business at the first of the month, Marshall said Oct. 2 that shippers all over the country told her that demand is lighter than usual.

McDonald’s sales are up but mid- to higher-range casual range dining establishments are struggling, he noted.

The National Restaurant Association, Washington, D.C., said in late September restaurant operators reported negative same store sales for the eighth time in the last 10 months, with the uncertain economy and rising food costs the top worries of managers.

Stanton said dark economic news figures to also increase business at every day low price-oriented retailers such as Wal-Mart, club stores and hard discounters such as Aldi. Even so, he said the top of the market — retailers such as Whole Foods, Wegmans and Publix — can likely withstand the pressure a little longer because consumers who shop there are less price sensitive.

“The good news for the food industry is that it might shake the market up a little bit, but everyone is still going to buy food,” Stanton said.

Within the produce category, consumers may opt for canned vegetables instead of fresh vegetables, or eat broccoli instead of asparagus, and other shifts to help consumers trim their budgets.

Stanton said that consumers may not be quite as wary when it comes to resuming normal food choices as they will be in deciding to make new large expenditures.

“They may be afraid to go out and buy all new furniture, but you might be quicker to switch back from the broccoli to the asparagus or from the canned vegetable to the fresh vegetable,” he said. “People will move back to their usual food purchasing behavior faster than many of the other categories.”