Creativity key to expand share of food dollar

posted May 14, 2018 7:47 a.m. (CDT)
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by / Heidi Clausen, Editor |

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The farmer’s share of the retail food dollar has sunk to a new low, according to new figures from the U.S. Department of Agriculture Economic Research Service’s Food Dollar Series. For every dollar consumers spent on food in 2016, farmers received less than 15 cents.

This is down almost 5 percent from the year before, and it’s the lowest farmer’s share since the series was launched 25 years ago. When adjusted for inflation, in 2009 dollars, the 2016 farmer’s share of the food dollar was about 12 cents, down almost 12 percent from 2015 and again, the lowest level since the series began.

So, how did farmers get to this point? And how can they recapture more of that precious food dollar? As with many things, it’s easier said than done.

USDA officials say this trend reflects shifts in how Americans eat, along with low commodity prices. Consumers once cooked most of their meals at home, but now, they go out to eat more. While they were once content to husk their own corn and slice their own apples, they now opt to buy many of their foods pre-husked, pre-sliced and otherwise processed for them. In other words, food takes a longer journey to get to our dinner plates.

Non farm-related marketing associated with the food dollar, such as transportation, processing and marketing, rose to a record-high 85 cents.

The largest decline in the farm share of the food dollar was in food consumed away from home. The farm share of food away from home was about 4 cents, down 10 percent from the prior year. The smaller share of the food dollar consumed away from home is attributed to the costs of restaurant food service and preparation.

National Farmers Union President Roger Johnson said the new low speaks to the state of the farm economy, corporate control of the food system and the need to prioritize family farms in national policymaking.

“This figure strikes a chord with family farmers and ranchers who are dealing with the sharpest decline in net farm income since the Great Depression,” he said. “The prices that farmers have been receiving for their products aren’t paying the bills, and too many are being forced to give up farming. Our nation needs a dramatic, progressive movement towards ensuring family farmers can receive a fair price from the marketplace. Otherwise, we’re going to continue to lose too many of the family farmers and ranchers who feed, fuel and clothe our country, steward our nation’s land and power our rural communities and economies.”

NFU reports monthly on the USDA’s farm share for 15 popular food items. The latest NFU Farmer’s Share shows that beef producers receive only a little more than $2 for a pound of beef that costs $8.99 at the supermarket. Wheat farmers average a paltry 12 cents on a loaf of bread that retails for $3.49. Dairy producers pocket only $1.34 from a $4.49 gallon of fat-free milk.

Johnson said the farmer’s share does not always correlate with food prices and the disconnect between the two should not confuse consumers.

“Most consumers do not fully realize the volatility and risk associated with farming or the economic despair many family farmers are enduring right now. However, when you consider that what you’re paying at the grocery store continues to drop and you see the ‘Farmer’s Share’ continue to drop, you can imagine that it’s hard to earn a decent living in agriculture right now.”

To better illustrate the decline in net farm income over the past five years, NFU compared its farmer’s share figures in April 2014 to those of this April. The comparisons show the farmer’s share declining by up to 50 percent for five popular food items, including beef (producers earned just 22 cents on the retail food dollar this April, compared to 44 cents on the dollar four years ago), wheat (the farmer’s share dropped by 25 percent) and dairy (farmers received 30 cents on the retail food dollar this year, compared to 51 cents in April 2014).

Falling share doesn’t necessarily hurt farmers, Patrick Canning, a USDA senior economist, told The Washington Post, but it does expose the long-term, macro trends shaping the supply and cost of food.

“This measure basically asks, ‘What value was added at each stage of the process?’” he said. “Long term, we definitely see the farm share trending down over several decades.”

But it’s not all doom and gloom: While the farmer-to-consumer divide is ever-widening in this country as a whole, Johnson said, it’s shrinking in many places, thanks to creative, new markets.

It seems that farmers must situate themselves closer to the end consumer, when possible, and hold their cooperatives more accountable for helping them cut a bigger slice of the pie.

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