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On a recent Saturday as I was making my weekly stroll through the grocery store, I began thinking about what the grain farmers sell is worth on the retail shelf. With that in mind, I priced four common items manufactured with the grain American farmers produce.
The first item on my grocery list was spaghetti. A 16-ounce package was priced at $1.39; if grain producers received full retail price for their goods, an equivalent price would be $83.40 per bushel. But, at that time, durum wheat in Noonan, N.D. brought only $3.85 per bushel.
A 16 ounce loaf of bread was $1.05 - 73 loaves can be made from one bushel of wheat. That equates to a $76.65 per bushel producer price. Wheat cereal flakes can be retail priced up to $3.68 per 18 ounce box or $196.27 per bushel. However, the price of wheat in Beloit, Kan. was only $2.70 per bushel. Paul Harvey recently noted that if Tiger Woods' picture appears on that cereal box, he receives 10 cents while the farmer who produces the grain receives only 3 cents.
The final item on my list was corn flakes. An 18 ounce box was priced at $3.38, which would mean full retail producer price for corn would be $168.24 per bushel. But, in Adair, Iowa, corn farmers were being paid $1.55 per bushel at that time.
Every time we hear about an agribusiness merger, proponents of that merger tell the industry that it is justified by greater efficiencies, lower prices for consumers and higher profits to producers. Cereal for $3.68 per box doesn't seem like a low price to me, and $2.20 per bushel wheat is definitely not a profit for farmers.
It just seems unfair to me that farmers, who are trying to insure you and I have enough to eat, are penalized with low prices while I have to pay $196.27 per bushel for my breakfast cereal.
How Much of the Cost of Food Services and Distribution Goes to Farmers?
The estimated bill for marketing domestic farm foods–which does not include imported foods–was $498 billion in 1999. This amount covered all charges for transporting, processing, and distributing foods that originated on U.S. farms. It represented 80 percent of the $618 billionconsumers spent for these foods. The remaining 20 percent, or $121 billion, represents the gross return paid to farmers.
The cost of marketing farm foods has increased considerably over the years, mainly because of rising costs of labor, transportation, food packaging materials, and other inputs used in marketing, and also because of the growing volume of food and the increase in services provided with the food.
In 1990, the cost of marketing farm foods amounted to $343 billion. In the decade after that, the cost of marketing rose about 57 percent. In 2000, the marketing bill rose 6.9 percent. These rising costs have been the principal factor affecting the rise in consumer food expenditures. From 1990 to 2000, consumer expenditures for farm foods rose $211 billion. Roughly 92 percent of this increase resulted from an increase in the marketing bill.
The cost of labor is the biggest part of the total food marketing bill, accounting for nearly half of all marketing costs. Labor used by assemblers, manufacturers, wholesalers, retailers, and eating places cost $252 billion in 2000. This was 4.7 percent higher than in 1999 and 64 percent more than in 1990. The total number of food marketing workers in 2000 was about 14.3 million, about 17 percent more than in 1990. About 80 percent of the growth in food industry employment occurred in public eating places. A wide variety of other costs comprise the balance of the marketing bill. These costs include packaging, transportation, energy, advertising, business taxes, net interest, depreciation, rent, and repairs. Their relative proportions are illustrated in the accompanying dollar chart.
What does certified organic mean?
Certified organic refers to agricultural products that have been grown and processed according to uniform standards, verified by independent state or private organizations accredited by the USDA. All products sold as "organic" must be certified. Certification includes annual submission of an organic system plan and inspection of farm fields and processing facilities. Inspectors verify that organic practices such as long-term soil management, buffering between organic farms and neighboring conventional farms, and recordkeeping are being followed. Processing inspections include review of the facility's cleaning and pest control methods, ingredient transportation and storage, and recordkeeping and audit control. Organic foods are minimally processed to maintain the integrity of food without artificial ingredients or preservatives. Certified organic requires the rejection of synthetic agrochemicals, irradiation and genetically engineered foods or ingredients. To find out more about the national organic certification requirements and organic program, please go to the USDA National Organic Program website www.ams.usda.gov/nop.
Is organic food really a significant industry?
Approximately 2% of the U.S. food supply is grown using organic methods. Over the past decade, sales of organic products have shown an annual increase of at least 20%, the fastest growing sector of agriculture. In 2001, retail sales of organic food were projected to be $9.3 billion (Organic Consumer Trends 2001. Published by the Natural Marketing Institute, in partnership with the Organic Trade Association, www.ota.com...). Organic foods can be found at natural food stores and major supermarkets, as well as through grower direct marketing such as CSAs (Community Supported Agriculture) and farmers' markets. Many restaurant chefs across the country are using organic produce because they desire its superior quality and taste. Organic food is also gaining international acceptance, with nations like Japan and Germany becoming important international organic food markets.
Originally posted by PeanutButterJellyTime
I currently live in a VERY small town (less than 100 people) that is surrounded by miles and miles of farms. The wealthiest people around here are the farmers. Heck, the Mexican migrant workers who do all the labor earn up to $1500 per week.
How many square feet of farmland does it take to produce a bushel of wheat? I'm guessing about 16. A 4'x4'patch. Now take into account that most of today's farmers have hundreds or thousands of acres that the inherited from their parents, who inherited the land from their parents, etc. The farmers around here are born with a silver spoon in their mouth, send their kids to private school, etc. The initial price of a dollar or so for a bushel of wheat may seem low, but it is not when taken into context.