>In this country, 80 cents of every dollar spent on food is used to get the
>food from the farm to the eater. Only 20 cents gets to the farmer who
>spends on average 15 cents on inputs (labor, etc.)
That's on produce. For commodities it's often 10 cents or less. John
Ikerd and Charles Benbrook have each done some excellent work in this
domain that is, alas, substantially more discouraging than your
numbers. Benbrook has compared the ensemble of US production
agriculture to other sectors of the agri-food industry, and the results
are not pretty. Farming's aggregate return on gross revenues is 2.1%,
compared to Food Service -- 3.4%; Retail Grocery -- 4.6%; Pesticides
-- 5.9%; Food Processing -- 7.0%; and Seeds -- 12%.
When looking at profits against assets, things are worse yet. Food
Service -- 16.1%; Retail Grocery 10.6%; Food Processing -- 9.1%;
Pesticides -- 3.9%; Seeds -- 3.7%; and finally, Farming -- a piddling
0.4%. If you adjust Benbrook's profits against assets numbers to
account for average equity in those assets, farming's return on
investment (ROI) is *still* under 1% (and actually closer to 0.7% !)
That is roughly one-seventh the ROI to be had by putting the same
money in a totally-safe US Treasury bond.
And let's remember, too, that over three-quarters of US farmers have
gross revenues under $50,000 and on average show a net *loss* of $3,000
>It seems that shrinking that 80 percent sector might prove more productive
>than shrinking the 15 percent one.
Yes, indeed, though I'm not convinced that organic production (in
itself) is the answer. As organics is currently evolving, we have a
$4.00 box of organic corn flakes for which the farmer sees about 4
cents. Please explain how that is a substantial improvement on $3.00
conventional corn flakes, for which the farmer sees 3 cents.
To survive, farmers need to think more like the shareholders of a
corporation, focusing *first* on maximizing ROI. Getting our hands on
a bigger chunk of that 80 per cent is a major element of that process.
Most farmers, unfortunately, are content to work as staff for a
business that has no over-arching internal management structure. As a
result, the functions of VP Finance usually end up in the hands of the
Banker. The role of VP Production goes to major input suppliers. And
VP Marketing is most often the Buyer. All these external people are
understandably trying to fatten their own bottom lines, which is how
you end up with the kind of comparative returns that Benbrook cited.
Farmers have a greater chance of financial success if they think *more*
like business people, not less, and that success at least allows them
the option of taking better care of their land. Farmers who have their
backs against the wall financially are not particularly willing to
change *anything* because they simply can't afford to make a mistake.
Therein lies the core of our challenge in popularizing sustainable and
Attempting to address the agronomic issues before the management
challenges are resolved it unlikely to be especially satisfying or
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