Farmers’ share of food dollar shrinks

The U.S. Department of Agriculture reported recently that the farmer’s share of consumer food dollars is at its lowest point since 1993.

According to data collected in 2016, the most recent available, farmers received just 14.8 cents of every dollar spent by consumers for food.

That’s a 4.5 percent decline from 2015 and nearly a 14 percent drop from 2014. It’s also the all-time lowest share since the USDA Economic Research Service began the Food Dollar series 25 years ago.

“It kind of tells me the farmer’s share of what the consumer is eating is getting smaller,” John Newton, director of market intelligence for the American Farm Bureau Federation, said.

Adjusted for inflation, the real farm share is 12.2 cents compared with the baseline share of 17.5 cents in 1993, he said.

The experts at USDA’s Economic Research Service say there are two reasons for the drop. First, commodity prices have dropped from the highs of five years ago. Second, Americans are eating out more and restaurants claim the greatest share of the food dollar — 36.3 percent.

Farmers have long received a relatively small part of the dollar Americans spend on food. Unless food is purchased directly from the farmer, the people who process, package, transport and market food add more than 80 percent to the cost.

Farmers are really the only ones in the process who are price takers, not price makers. To one extent or another, everyone else in the supply chain can add a pennies, nickels or dimes to their price to cover their increasing costs.

The proof? As commodity prices continue to fall from their highs of 2013 the price of food has increased.

According to the U.S. Bureau of Labor Statistics, the cost of food between 2013 and 2016 increased by 1.5 percent.

And, they can raise prices with impunity. As food prices rise we hear no cries from the public blaming processors, whoever they are. It’s always the “rich farmer,” not the “rich grocer.”

There’s not much that can be done about this, other than farmers and ranchers redoubling their efforts to educate consumers about the economics of agriculture.


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