As Food Costs Climb, Farmers’ Profits Sink

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grocery store foodDid you realize how little of the amount you pay for fresh meat, dairy products or fruits and vegetables makes its way back to farmers? The latest information from the U.S. Department of Agriculture shows it’s now only about 16 cents of each dollar.

Federal officials say the remaining 84 cents goes to marketing and processing. They calculate that transporting, processing and packaging farm products so they’re ready to be enjoyed on the consumer’s table costs significantly more today compared with the recent past.

And, by the way, that 16 cents per dollar going to the farmer is just an average. The USDA says farmers who raise crops for foods, such as bread and cereal, have seen their share dwindle down to as low as 3 cents.

Most of what consumers pay for food in the supermarket goes for processing—an element which has increased in recent decades—transportation, non-farm labor costs and costs related to operating the supermarket. — Michael Walden“Most consumers are surprised to hear that the farmer’s share of the food dollar is only 16 percent,” says Michael Walden, a William Neal Distinguished Professor of Agriculture and Economics at North Carolina State University.

“Most of what consumers pay for food in the supermarket goes for processing—an element which has increased in recent decades— transportation, non-farm labor costs and costs related to operating the supermarket,” Walden adds. “This means fluctuations in supermarket prices are often unrelated to what’s happening on the farm. It also means farmers’ profits are certainly not tied to the difference between supermarket prices and farm costs.”

Generating those profits is not getting any easier because of a rising cost that affects everyone with a vehicle: climbing gas prices.

To represent not only North Carolina farmers but also growers from coast to coast, Colorado Farm Bureau President Don Shawcroft testified on Capitol Hill earlier this spring. Shawcroft told the U.S. House Natural Resources Committee that farmers will pay almost 85 percent more in fuel costs than they paid in 2000 just to plant their crops.

“Most Americans are feeling sticker shock caused by high gasoline prices when they fill their automobile’s tank,” Shawcroft says. “But there is no term in the English language to accurately describe what farmers feel every time they
put diesel in the tanks of their farm equipment.”

So what can you do to help farmers make enough money to stay in business while still getting quality food? Here in North Carolina, programs such as the 10 Percent Campaign are in full swing. The Center for Environmental Farming Systems, with support from North Carolina Cooperative Extension and the Golden LEAF Foundation, is asking state residents to spend at least 10 percent of their grocery budget on locally produced food.

 

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