What The Farmer Gets

[Larburlingame]

Monday, 21 July 2008

Ever wonder how much of your food dollar actually goes to the farmer? Take a guess at the farmer's share of the following items purchased at your typical conventional grocery store (most of these prices come from Safeway). The answers are after the jump.

Lays Classic potato chips: $3.79

Head of iceburg lettuce: $1.99

One pound top sirloin steak: $7.99

Pound of bacon: $3.29

Loaf of sliced bread: $2.99

One gallon skim milk: $3.99

Six-pack of beer: $5.05

Five pounds of flour: $2.89

On average, farmers and ranchers only receive 20 cents of every dollar that consumers spend on food.

Lays Classic potato chips: $3.79 = .08

One head of iceburg lettuce: $1.99 = .37

One pound top sirloin steak: $7.99 = .92

Pound of bacon: $3.29 = .55

Loaf of sliced bread (one pound): $2.99 = .17

One gallon skim milk: $3.99 = 1.55

Six-pack of beer: $5.05 = .12

Five pounds of flour: $2.89 = .86

Surprised? Or perhaps this was a depressing reminder of what you already knew.

USDA estimates that off-farm costs -- marketing, processing, wholesaling, distribution and retailing -- account for 80 cents of every food dollar spent in the U.S.

So keep those dollars in your farmer's pocket. By buying directly from farmers at markets, road stands and through community supported agriculture (CSA) shares, these off-farm costs become nominal and farmers' share profitable. And buying directly from farmers keeps the price of fresh, nutritious produce down as well, especially in the face of historic fuel prices. In other words, it's the way it should be: a distribution system that works for farmers and consumers both.

Source: National Farmers Union
http://envirovore.com/content/view/198/9/

[sugarbush]

Interesting..... I am skeptical about the price for a gallon of skim milk however.....
A gallon of whole milk weighs about 9 lbs depending on the butterfat content and since farmers are payed by the lb I think it should be figued by the lb.

Current milk prices are 19.00 a hundred so that is 11.1 gallons per hundred lbs and the farmer is making 1.72 per gallon for whole milk. I don't know how many gallons of skim they can get out of a gallon of whole, but it is more than one.

We buy alot of stuff locally..... I have yet to find a farmer who can sell me beer though.

[Kelly]

Originally Posted by sugarbush

Interesting..... I am skeptical about the price for a gallon of skim milk however.....
A gallon of whole milk weighs about 9 lbs depending on the butterfat content and since farmers are payed by the lb I think it should be figued by the lb.

Current milk prices are 19.00 a hundred so that is 11.1 gallons per hundred lbs and the farmer is making 1.72 per gallon for whole milk. I don't know how many gallons of skim they can get out of a gallon of whole, but it is more than one.

We buy alot of stuff locally..... I have yet to find a farmer who can sell me beer though.

Actually, it is hard to find a chart up to date with the price the dairy farmers are receiving for their milk because the price varies month to month/year to year. Just when one gets excited receiving 19.00 a hundred...the price drops. I think the main point is, the farmer has to farm the land to feed the cows, feed cows for two years before receiving milk, milk the cows, pay for trucking the milk to a bottling plant and ends up with less than 1/2 of what the retailer sells it for.

We built a bottling plant on the farm to eliminate the middle man and almost felt guilty at how much better the bottling plant business did compared to the farm business. I just wish every farmer could bottle his/her own milk and sell it. More farmers are forming coops and doing just that!

(Unfortunately, we had to sell out of the business this spring due to my husband's body wearing out). Not surprised since he worked almost every day in our 28 years of marriage.

[ladycat]

Originally Posted by Kelly

We built a bottling plant on the farm to eliminate the middle man and almost felt guilty at how much better the bottling plant business did compared to the farm business. I just wish every farmer could bottle his/her own milk and sell it. More farmers are forming coops and doing just that!

Bottling facilities on the farm are popping up all over!

[Beeman]

Ever wonder why farmers allowed this to happen and went along with it?

[deaconjim]

When you buy the bag of potato chips, the bag costs more than what is inside. Profit is made on the value added to the base materials, and the marketing, distribution, etc.

One way to increase farm profits is to do the value adding at the farm level, as some have already discussed. For instance, cattle and hog farmers can butcher and sell their own meat. Use goats milk to make soap, or use fruit to make jellies and jams. It does require extra work and investment, but that is how the profits are made.

[sugarbush]

I think it is just the natural migration.... With the industrial revolution came large scale processing and shipping so things started getting shipped. Now we are starting to see a migration back to small local supplies.... I think in 10 more years we will start to see less and less box stores and more corner shops and farmers markets that sell only specialty items like meat, cheese produce. I think we can thank the food network for a large part of this shift.

[Michael Kawalek]

Most of that percentage represents the cost of preparation, cooking, and delivery to your location. The guy that cuts the potatoes, fries them, and puts them in the bag should be payed. So does the guy who drives the truck to deliver it to the store conviently located just down the street from you. Then there's the guy (or girl) that ground that wheat, shaped the loaves, and baked the bread. Shouldn't they get paid for what they do also?

The truth is that the money we pay at the grocery store is not so much money for the crops themselves as it is the convienence of being able to buy ready-to-eat food products virtually at our fingertips. Imagine your life if YOU had to travel out to the farm to buy the farmer's wheat, then YOU bring it back and grind it, than YOU knead the dough into loaves, and then YOU bake it. You'd be pretty tired by the end of that day, wouldn't you? Well, that's what you're paying for every time you go to the grocery store.

[mnn2501]

Originally Posted by Larburlingame

So keep those dollars in your farmer's pocket. By buying directly from farmers at markets, road stands and through community supported agriculture (CSA) shares,

Too bad there are no local roadside stands, etc - I'd love to. They were all over when I was growing up, now theres none that I know of within 50 miles, whereas the Kroger is 2 blocks away.

[wy_white_wolf]

Originally Posted by deaconjim

When you buy the bag of potato chips, the bag costs more than what is inside. Profit is made on the value added to the base materials, and the marketing, distribution, etc. ....

Yep. Maybe for comparision they should look at how much the mining companys gets for the metals it takes to build a car or the hinges on your front door. I'll bet it's way less than what the farmer gets.

[CIW]

There is another factor that should be considered here. Its the MM (middle man).
This is the person who gathers smaller amounts of a given product, bunches them together and resells them in larger quantiities. As the given product passes by the MM he/she takes a skim. $$$$ Most products are not stored by the MM. They have been sold prior to accepting delivery.
It happens in most industries.
The most financially successful businesses are the ones where a step between the production of the raw material and the purchase of the final product by the consumer.
I'm not saying that MM are all bad as long as they are a good parisite and not kill the host (producer) by taking too much as it passes by them. They do things like bringing together smaller amounts of a given product and reselling it to a wholesale product producer.
The MM can often be eliminated or lessined by co-op organizations and direct marketing by the producers themselves.
In Utah, we have a very successful Turkey production co-op that takes their birds from the egg to the freezer. Including purchasing feed, medicine, equipment, veterinary services. Just about anything that you can imagine to get a bird on your table. They have even taken their by-products (manure and body parts) and built other enterprises around them. There is also a marketing division that promotes the products and gets you (the consumer) to buy them.
They seem to be able to sell all the turkeys they can grow. And have been at this level for many years.
They have become their own MM.

[texican]

And I can guarantee you, everyone up and down the line, besides the farmer, made a profit on the transaction. Farming is the only occupation that does not follow the standard business precepts... buy low, sell high... farmers buy at retail, and sell at wholesale (if they are lucky).

[Woodchuck]

Sorry, I don't feel sorry for them.
It's the farmer's choice to participate in commodity agriculture.
It's the price they pay for feeding the "problem".

<Woodchuck>

[sugarbush]

Originally Posted by mnn2501

Too bad there are no local roadside stands, etc - I'd love to. They were all over when I was growing up, now theres none that I know of within 50 miles, whereas the Kroger is 2 blocks away.

The pickings are slim in your area, but there are a few places around. Check out Eden's Garden..... They are thinking about starting a CSA.
http://www.localharvest.org/search.j...le=9&zip=75398

[chris30523]

We raise hens commercially and get .44 cents a dozen for clean eggs and .15 a dozen for double yolk and dirty eggs.Not a bad deal for us.The company we contract for supplies the chickens,feed,and medicine.We supply the housing, water and electric and labor.Sure it would be nice to get the market price but after I paid for feed,boxing,hauling etc. My profit margin probably wouldn,t be much higher.

[arabian knight]

I bet a lot of folks don't know the price of milk a farmer gets also varies from State to State and from Coast to Coast~!!
The Price of milk was set many years ago as follows, the Further you Lived From Eau Claire, WI. the MORE you received for your milk. Which made a lot of people in WI. mad as people in WI received less for their milk then anybody in the USA. And People in Texas, CA. and such received much more~!. JUST a few years ago they changed the City from Eau Claire, WI. to I believe it is New York or at least in the North East anyways. and BTW I lived 15 miles from Eau Claire WI. and NEVER heard about this pricing structure UNTIL it was changed to the North East a few years ago~!!!
So now it STILL varies from State to State as it depends on how from from the North East you are in the country. So pricing you hear is an average price per pound and will vary depending where you live~!!!

[longshot38]

Originally Posted by Michael Kawalek

Most of that percentage represents the cost of preparation, cooking, and delivery to your location. The guy that cuts the potatoes, fries them, and puts them in the bag should be payed. So does the guy who drives the truck to deliver it to the store conviently located just down the street from you. Then there's the guy (or girl) that ground that wheat, shaped the loaves, and baked the bread. Shouldn't they get paid for what they do also?

The truth is that the money we pay at the grocery store is not so much money for the crops themselves as it is the convienence of being able to buy ready-to-eat food products virtually at our fingertips. Imagine your life if YOU had to travel out to the farm to buy the farmer's wheat, then YOU bring it back and grind it, than YOU knead the dough into loaves, and then YOU bake it. You'd be pretty tired by the end of that day, wouldn't you? Well, that's what you're paying for every time you go to the grocery store.

well said, my family own a bakery and the costs keep going up and up and after a while you just have to pass that cost onto the comsumer. when we started flour was $11 a hundred pounds today its $26 per 44 pounds. all other supplies have increased out to sight as well. the cost of a loaf of bread is like an iceberg, you only see the tip but not the other 90% that goes into making the product. this holds true for most products that you purchase.


dean

[Gary in ohio]

Supprised, Heck yes, I didnt know cows gave skim milk!!!!!

Most of the prices look ok but milk looks HIGH!!!

[texican]

Originally Posted by Woodchuck

Sorry, I don't feel sorry for them.
It's the farmer's choice to participate in commodity agriculture.
It's the price they pay for feeding the "problem".

<Woodchuck>

I reckon you're not fond of eating....

Personally, I wish farmers would stop commercial farming... it'd solve the population problem overnight. People think the prices of food stuffs are getting out of control. If magically, farmers had all of the built in profits, minimum wages, health insurance, 401Ks, etc. that most workers are accustomed to, Americans would suddenly find the cost of their food tripled or quadrupled, instantly.

Let farmers not farm for others, but for theirselves, just one season... just one... within a few months of empty shelves, they'd suddenly find themselves the richest people in America...

If you haven't eaten in two weeks, and there's absolutely nothing available to eat... all of the material wealth one has, is worthless... what would you give for a loaf of bread???

Most farmers I know, put up with this rotten system, because they feel they have a higher calling... they don't want to see children starving. They usually work against their better self interests... and accept the system as it is...

[MELOC]

milkfat is a premium product and i suspect that has something to do with the price of skim. it's like comparing apples to oranges.