Farmers’ share of food dollar reaches historic low
The American farmer’s share of the food dollar has reached historic lows. And that share fell to 14.8 cents in 2016, according to the U.S. Department of Agriculture’s Economic Research Service’s Food Dollar report.
This was down 4.5 percent from 2015 and the lowest level since 1993. When adjusted for inflation (in 2009 dollars), the farmers’ share was just 12.2 cents, according to the report.
“That is not surprising since the prices that dairy, grain and beef farmers receive for the food they produce have dropped by around 50 percent since 2014,” noted Jeremy Moyer, a dairy farmer and Amelia County Farm Bureau president. “I hope demand for dairy, in my case, goes up, but unfortunately what I receive is not directly correlated to those prices.”
Botetourt County beef cattle and vegetable farmer Michael Beahm echoed Moyer’s sentiment. “I’m disappointed but not surprised as this has been the trend for many years.” Beahm added that consumers sometimes think rising non-farm costs will increase their food cost. However, “most of the cost increase is reflected in less paid at the farm level.”
The farmers’ share of each dollar spent on domestically produced food represents the percentage of farm commodity sales tied to that food dollar expenditure and sold to non-farm establishments. It doesn’t include sales of farm commodities that are mixed into other products.
By contrast, non-farm related marketing associated with the food dollar, such as transportation, processing and marketing, rose to a record-high of 85.2 cents.
“Processors and retailers make a higher margin, instead of prices reflecting the farmer’s price,” Moyer said. “I have been really squeezed in the past few years of lower commodity prices. It has made me a better manager, but it’s not sustainable in the long run.”
And it’s not just retail food that reflects a low percentage to farmers.
The report also said the farmers’ share of food consumers ate at home was down 2.9 percent from 2015.
The largest decline in the farm share of the food dollar was in food consumed at restaurants. This was 4.4 cents, down 10.2 percent from the prior year. The smaller share of the food dollar consumed outside of the home is attributed to the costs of restaurant food service and preparation, the report said.