Perspective: Twenty Cents Is About Right

October 6, 2010 11:52 AM

In the litany of grievances that we keep handy to justify our convictions, one of the more curious is the abiding belief that ag producers are somehow being swindled out of their just share of the consumer dollar. A standard metric that we all have memorized is "The farmer only gets about 20 cents of every food dollar."

The core of this argument is a misunderstanding  about the difference between food and what we actually produce. Food is what humans eat. In truth, most of us don’t produce food; we produce grain, livestock, etc.—in other words, ingredients for food.

To be sure, fruits and vegetables are very close to the food category, and as the economics of agriculture would seem to suggest, they collect a high share of consumer dollars. How much processing does a peach need, after all?

But try and chew your way through a bowlful of corn. Not corn flakes or corn meal or a corn dog—just corn. Nope, No. 2 corn is not food. But it can become food thanks to a process that literally made us the people we are today: cooking. In this case, I am using the term as a synonym for food processing, meatpacking and other actions that take raw farm products and make them edible.

This is why the ubiquitous pseudo-statistic of millions of jobs "depending" on farmers is merely our parochial way of viewing a complex industry. Another equally valid perspective is to say it is "thanks to those millions of jobs" that my output has any value to consumers.

Biological anthropologists now recognize food processing as the technological breakthrough that made us all human. Early hominids soon reached the limits of brain development, which is highly energy-intensive, simply because hunting and gathering can keep you alive, but only just. And even then you spend enormous amounts of energy and resources chewing and digesting low-energy vegetation.

But the domestication of fire meant that even though we lacked the digestive chemistry to thrive on raw meat, we could suddenly ingest enough cooked protein to afford to develop an organ that sucks up 25% of our caloric intake: a brain.

Now add in cooking—which essentially makes food soft, nutritionally more exploitable and often more storable. Powerful jaws with
massive molars diminish to afford space for a bigger cranium and a prefrontal cortex. Huge guts shrink due to less mass from concentrated cooked rations.

Richard Wrangham, a researcher at Harvard, asserts with considerable evidence that we are best described as "cooking apes" inasmuch as food processing made it possible for us to evolve to modern humanity.

It’s about Processing. Given the importance of turning most of the stuff we grow into stuff we can actually eat, insisting that it’s all about the raw materials is perhaps misguided at best. At the same time, there seem to be sufficient market forces present (a hot debate right now, I know) for slices of those consumer dollars to nudge the allocation somewhere close to fair value. For corn farmers, it may be only a few cents, but if that totals out to $5 per bushel, most of us are pretty satisfied, no?

Moreover, this distribution will likely continue to concentrate more reward in processing versus raw produce. Consumers want convenience, portability, intense flavors, wide choices and specific nutrient combinations. Very little of that value will be added on my farm, so a few more cents flow to the processors.

Besides, comparing our share to the rest of the value chain is pointless. The real question is whether our compensation is enough to induce us to grow. If you are farming, you have already cast that vote.

If 20 cents isn’t enough, you can always opt out and start eating the "food" you grow. Then ask yourself what bargain you would strike in order to exchange that handful of soybeans for a nice, fresh Pop-Tart.

John Phipps is a farmer from Chrisman, Ill. He is the TV host of "U.S. Farm Report." Contact him at For local station listings, log on to

Top Producer, October 2010

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