Wednesday, June 06, 2007

Farmer's share of the retail food dollar

One of the anonymous posters from my previous entry mentioned something about the cost of food going up because of ethanol. If prices do go up on food this year, it won't be significantly due to ethanol.

From the National Farmers Union June 2007 issue:


Item Retail Price Farmer's Share
Multi-purpose flour (5 lbs) $1.95 $0.51
Bread (Wonder, 1 lb loaf) $2.49 $0.10
Wheaties (18 oz box) $5.05 $0.08
Milk (1 gal, fat free) $3.69 $1.31
Potatoes (Russet, 10 lbs) $3.29 $0.84
Potato Chips (Lays, 13.5 oz) $3.49 $0.12
Cheddar Cheese (1 lb) $4.49 $1.60
Boneless Ham (1 lb) $4.29 $0.46
Bacon (1 lb) $3.29 $0.46
Top Sirloin Steak (1 lb) $5.99 $0.95
Eggs (1 doz A-XL) $2.19 $0.72
Carrots (fresh, 2 lbs) $1.89 $0.57
Lettuce (head, 2 lbs) $1.79 $0.37

I don't know the farmer's share of the price of corn flakes is, but I'm sure it's about the same as Wheaties.

The point is, a lot of the cost you pay for food is for processing, marketing, and transportation. Not that those things aren't important, and that those who do the work shouldn't be compensated, but to say that the cost of Corn Flakes is extremely tied to the price of corn is absurd. Corn could go to $10/bu and the cost of cereal would only need to go up a few cents to cover the move. Instead, manufacturers take advantage of input changes to take everyone to the cleaners.

The American Meat Institute recently promoted a research piece that said because of ethanol, food prices for the average American will rise $50/year over the next year. The AMI is upset because now that corn prices are where they should be, they can no longer get cheap corn to feed livestock. Maybe they'll have to start paying a little more, eh?

$50/year is hardly worth mentioning - that's about $4/month. If you use 50 gallons of gas a month, and the price moves up 8-9 cents, you've just spent $4/month more than last. How many times have we seen gas prices move up 8-9 cents in a month? How about in a week?

The point is - Retail food prices are not strongly correlated to the cost of the grains, vegetables, oilseeds, and meats produced on the farm. A greater expense than the original input is the labor to haul, process, market, and haul again. Don't blame the farmer for wanting to make some money and reduce our dependence on foreign oil - look in the mirror instead.

3 Comments:

Anonymous Anonymous said...

Agrigiants are a cancer on the countryside. They wreck the countryside with factory farms and importing illegal aliens and foreign workers to work in them. When they get to the processors they import and hire more of them. All of this wrecks small towns where they set up shop. It turns those bucolic small towns into violent third world slums.

Those same agrigiants screw farmers on every level. They have thrown the entire system of agriculture out of whack and made farmers little more than government supported serfs on the land. They get little or nothing for the crops that are sold to the consumer.

The consumer is getting screwed. The garbage getting pushed out of packing houses is swimming with lord only knows what. It is also pretty much flavorless by the time it gets to you. What the agrigiants call chicken wouldn't be classified as that by your grandparents. Pardon the pun but it is foul. Soaked in a cocktail of mystery brine and chemicals and with a flavor and texture only slightly resembling real chicken.

I would really love to see more farmers set up a system locally where they bypass the whole conventional agrigiant distribution and money sucking model and get more consumer money into the hands of farmers.better product and no middleman and it keeps it close to home.

1:34 AM, June 07, 2007  
Blogger bgunzy said...

Local food systems are what you're asking for. I am 100% in support of local food systems. We buy a 1/4 or 1/2 beef from a local farmer when we get the chance. We have a garden and raise our own spinach, onions, sweet corn, etc.

However, not everyone is willing to pay a little more for locally grown, high quality food. They perceive the run-of-the-mill grocery store products to be OK, so why pay more than that?

It all comes back on ourselves, folks. If you wonder why we have a trade deficit with China, factory farms, and tasteless pork, just look in the mirror. Cheap food policy.

6:56 AM, June 07, 2007  
Anonymous Anonymous said...

Take a look at Milan, Missouri sometime. There are three Mexican cafe restaurants on the town's little square. Spanish dominates the local lingo...

10:06 AM, June 07, 2007  

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