As Food Prices Rise, the Farmer's Share Drops

Farmers and consumers have a lot in common: neither benefit from higher grocery prices. The National Farmers Union recently released its Farmer's Share (of the grocery tab) data for the month of September, and once again, farmers came out on the losing end-even with higher than normal commodity prices.

Product Retail Price Farmer's Share
Multi-Purpose Flour, 5 lbs $2.59 $0.63
Bread (1 lb. loaf) $1.99 $0.12
Cereal (18 oz.) $4.19 $0.06
Bacon (1 lb.) $4.39 $0.61
Soda (2 liter cola) $1.59 $0.07
Cheddar Cheese (1 lb.)$3.29$1.62
Lettuce (head, 2 lbs.) $2.19 $0.36
Fresh Carrots (3 lbs.)$2.99$0.81
Milk (1 gal. fat free) $3.79 $1.38

*Retail prices: based on store brand except where noted from Safeway, Washington, D.C., September 29, 2010.

In fact, the farmer's share of the retail food dollar has been on the decline for more than 60 years. In 1950, farmers received more than 40 cents for every food dollar that consumers spent in the grocery store. Today, they receive a paltry 19 cents.

And that 19 cents isn't even pure profit—instead it's put towards the many expenses of running a farm, such as seeds, machinery, fuel, and fertilizer. The farmers simply have to hope and pray that their yields and market prices are high enough to cover the costs. If not, they hope for a better year next year in order to pay off the loss-or worse, hang it up.

So where's the remaining 81 cents going that the farmer isn't getting? It pays for marketing, processing, wholesaling, distribution, and retailing, factors that are out of the farmer's hands once he sells his product.

A few years ago, when food prices peaked at unusually high levels, some blamed the farmer when the actual culprit was high oil prices and food company profits. Rising oil prices translate into higher transportation, processing, packing, and distribution costs, which add to the final price consumers see but not the money that goes into the farmer's pocket.

And, while our grocery store bills may rise and fall depending on a number of external factors, the farmer's share generally remains unaffected.

The Farmer's Share data is particularly troubling given the face of American agriculture today: almost half of all American farmers today are older than 55, and a mere eight percent of farmers are younger than 35. The costs of running a farm continue to rise while profits decrease, and many family farms rely on off-farm income to stay in business. It's no wonder that many in younger generations are hesitant to devote their lives to such a risky business.

Still, farmers and ranchers are, by nature, big risk takers and hopeful people. There isn't a lot of profit in farming and ranching today, but there's plenty of family pride.


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