MFU Public Radio Commentary

By Sandy Courtnage, Communications Director

April 8, 2008

Farmers Share

Spring is on its way – and I’m ready to get out in the garden.  Digging in the dirt is great therapy after a busy day, and the taste of home-grown veggies can’t be beat.  It helps the grocery budget too.  Have you noticed how the cost of groceries is increasing?  According to the Consumer Price Index, food costs are about 4 1/2 percent higher this year than last year. 

You may have also heard about the high farm commodity prices right now and come to the conclusion that farmers are rolling in the dough at your expense.  Actually, it’s not quite that simple. 

First of all, there are some decisions made by farmers that collectively do affect food prices.  Just last week, for example, the U.S. Agriculture Department reported on farmers’ planting plans based on thousands of farmers surveyed at the end of March.  The report said that less corn would be planted and more soybeans.  This news then caused the price of corn in the commodities markets to rise and soybean prices to fall.

There also is pressure on wheat supplies right now.  The USDA reported that wheat stockpiles have fallen in the last year, which means that there is little buffer if the weather is not favorable this year and harvests are poor.

The reduced supply of wheat is one reason market prices for wheat right now are at amazing levels.  Prices recently have been in the $15 to $20 per bushel range.  Given that farmers were receiving $3.00 per bushel not so long ago, one could assume that farmers are smiling all the way to the bank.  Most of the farmers we have talked to, however, sold their crop after last summer’s harvest at the $5.80 to $7.00 per bushel range.

Of course, the cost of fuel affects us all as we make our way to work.  Whether you are commuting to work in town or across the field, the rising cost of fuel has impacted us all dramatically. In fact, rising energy prices have twice the impact on the Consumer Price Index for food than the price of corn.

What farmers are struggling with now is finding that their costs of putting in a crop have all been tied to the current higher price instead of what they actually received last fall.  Evidently, everyone wants a piece of the perceived boom and that affects the cost of our food. 

So, even though farmers have received higher prices for some crops they produce, I hope you are convinced that farmers are not price gouging. Farmers are price takers – not price setters.

Every month the National Farmers Union publishes a “farmers share” report that details how much of a typical food budget goes to the farmer.  Here are some recent examples based on USDA reported prices.

Farmers and ranchers receive only 20 cents of every food dollar that consumers spend.  According to the USDA, the Farmers Share of the consumer food dollar has been shrinking for decades.  In 1952, farmers earned 47 cents of every dollar spent on food.  Now, off farm costs including marketing, processing, wholesaling, distributing and retailing account for 80 cents of every food dollar spent in the United States.

To look at it from another vantage point, the cost of sirloin steak reportedly increased by $2 per pound, but the rancher’s share increased just 10 cents.

There are a few bright spots in this rising cost scenario that may help the situation.  First, policies that are designed to support local farms, local food systems, and urban agriculture could be strengthened.  As fuel costs rise, there is more incentive to shorten supply chains.  The “farmers share” in 1952 was, in part, due to more local purchasing opportunities.

So, if possible, target your food dollars as close to home as possible.  And work for public policies that support these efforts.  It makes sense for you, for your neighbors who are farmers and gardeners, and for our environment.  I hope you have a great spring – and happy planting.

For the Montana Farmers Union, I’m Sandy Courtnage.  Thanks for listening.