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Even at an early age, Cheryl Day was a passionate and practical advocate for agriculture. Check out her viewpoint on current agricultural topics.

Farmers are Increasing My Food Prices

Mar 19, 2011

I knew when the price of gas began to rise the media outlets would begin finger pointing at agriculture for the increase costs of groceries in the supermarket.

After a great week of Celebrating National Ag Day and crazy schedule, I finally got to enjoy a quiet day on the farm listening to the Today Show over morning coffee. My ears perked when Janice Lieberman began to discuss the rise of food costs. As she carefully pointed out that the USDA predicts the price of food will increase 3 to 4 percent this year, I muttered under breath and who is to blame? You Betcha “The American Farmer”
So with full attention I listen to Lieberman’s piece about increase food costs and tips to consumers. After all I am not just a farmer but a mom and consumer. At the end as the reporters discussed the rise of food costs injecting personal perspectives, chills rose up my spine when I heard Janice Liberman utter these words “Corn is the Culprit”.
So apparently, we need a refresher course on the Actual Costs of Food from Field to Table:
Did you know that farmers and ranchers receive only 20 cents of every food dollar that consumers spend on food at home and away from home?
According to USDA, off farm costs include marketing, processing, wholesaling, distribution and retailing account for 80 cents of every food dollar spent in the United States.
foodcosts
Click to download this Food Cost Breakdown provided by National Farmers Union
Futhermore, the United States Department of Agriculture points out these facts about Foods Costs:
  • Higher corn prices increase animal feed and ingredient costs for farmers and food manufacturers, but pass through to retail prices at a rate less than 10 percent of the corn price change.
  • Corn as an ingredient in food items make up less than a third of retail food spending, overall retail food prices would rise less than 1 percentage point per year above the normal rate of food price inflation when corn prices increase by 50 percent.

 

So what is behind the rise in food costs?
The price of Crude oil, the price of the doing business for the packaging-manufacturing-distributor-retail
I think the best answer to Consumers’ Question on Food Costs was given on the Ohio Farm Bureau Website:
If food prices rise, do farmers get more money?
The short answer is no. Commodity prices rise and fall every day, but farmers have nothing to do with setting food prices unless they are selling directly to consumers at their own farm, farmers market or as part of a group farmers market. On average, more than 80 percent of the cost of food at the grocery store is attributed to marketing and transportation costs, that of which a farmer gets nothing. (http://www.virginiagrains.com/Food%20and%20Fuel.htm)
 
Reference:
Farmer’s share derived from USDA, NASS "Agricultural Prices," 2011. Retail based on Safeway (SE) brand except where noted. http://www.nfu.org/media-galleries/document-library/nfu-literature/farmers-share/

 

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COMMENTS (5 Comments)

DayAngus - Cerro Gordo, IL
Thank you for the comments and appreciate you reading my perspectives. I also appreciate the productive discussion and the additional given facts. Remember, I raise cattle and also face with increasing feed costs. I research and properly formulate the properly ration that contains both Corn and Soy protein. All farming operations are feeling the increasing input costs both on the grain and livestock farm. I do agree that dairy farms have been hit hard. Bottomline farmers do not set the price of grain it determined by supply and demand. At what point we sell or buy our grain is part of our management decisions. I look forwarded to talking ag issues with you in the future.

7:46 PM Mar 21st
 
cornbelt
This article is mostly correct. My beef is with the comments.
1) Corn ethanol is not the devil as the oil companies have claimed. The corn used for ethanol is #1 and #2 dent corn, both feed corns. The process of making ethanol subtracts the sugars to make alcohol and the leftovers go back to the farm to feed livestock. Anything inedible is burned to offput the energy cost of distilling. There is almost ZERO waste involved. Yes, it is more inefficient than straight gasoline, but the zero waste and lessened dependency on foreign oil is well worth it. In short, it does not effect the food prices at all.
2) I have no idea what point you are making about dairy farms. The price of feed for your cows is not controlled by the grain farmers. Try buying straight from a farmer rather than through a grain elevator or retailer to reduce mark-up.
3) Farmers are not multimillionaires (kinda). Their net worth is in the millions but that is tied up in land and machinery. They don't have a lot of cash lying around. Farmers put in 60-80 hours a week most of the year and make, on average, about 50K a year. That is far from the millions you claim. Yeah, they may get a check for a few 100K at the elevator but that covers overhead costs (machinery, taxes, land maintenance, IPM practices, etc) and leaves little left over...
4:01 PM Mar 21st
 

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