two weeks ago someone asked a question on the price of wheaties...
Subject: The Take of The Small Farmer
Farmers seeing less of food dollar
Updated 2:37 PM ET November 29, 1999
By E.W. KIECKHEFER Why does a box of Wheaties cost $3 when the
farmer who grew that wheat got only 5 cents for the raw material?
The farmer's share of the consumer's food dollar has been
shrinking steadily for months. The USDA recently reported the value
of its "market basket" of foods, those used in most American homes,
for 1997 showed the farm value had fallen 4.4 percent from the
previous year, the largest decline since 1941. In that same year,
retail food prices rose 2.6 percent after a rise of 3.3 percent in
Food prices rose slightly more at restaurants than at supermarkets _
2.8 percent vs. 2.5 percent.
These were the "spreads" on some common food items in 1997:
_A can of tomatoes selling for 56 cents in the store gave the
farmer who grew them just 4 cents.
_A pound of potato chips was worth $1.95 in the supermarket but the
farmers got only 33 cents of that.
_A pound of pork marked $2.32 at the meat counter gave the hog
just 81 cents.
There have been some changes in prices in the last two years, of
course. Wheat, corn, pork and beef producers have seen their
prices drop sharply, to the point where they say they get less for
their products than they must spend to produce them. But the pound
loaf of bread that sold for 87 cents in 1997 probably averaged
closer to $1 in 1999. And retail prices on beef and pork have
declined far less than the prices farmers have been getting for
their steers and hogs.
So, where does the rest of the consumer dollar go? ...
The USDA totaled all these items for 1997 and said consumers spent
$561 billion for food produced on U.S. farms that year, 60 percent
of that being spent in grocery stores. The other 40 percent was
consumed in restaurants. Seventy-nine percent of the total $441
billion went into marketing costs and $120 billion went to the
We probably will be hearing more about farm-to-grocery price
spreads now that farm prices for so many commodities have fallen so
low. Farmers already have been taking note of the spread between
the prices they get for their hogs and cattle and what meat markets
are charging consumers.
Farmers are concerned the meat packing business has been
concentrated in a few companies that have been operating
super-packing facilities, often "breaking" the carcasses into
consumer cuts, too, thus eliminating at least one step in the
marketing chain. Farmers have been worried, too, about the trend
toward super-farms with thousands of pigs or cows in each
U.S. farming has been going through another "revolution" that's
still building. The final shape of it may be determined by factors
such as environmental impact rather than prices. And a growing
factor has been consumer awareness of such things as genetic
modification of crops, the use of powerful chemicals to control
weeds and insects, and the incidence of harmful bacteria in
processed meats. ...
A growing number of small farmers are surviving by direct-to-
consumer operations farmers' markets in nearby cities and roadside
stands near their farms. Consumers seem willing to pay somewhat
higher prices at some of those farmer operations because they value
the freshness of the produce. In some communities there also has
been a trend to farm- processing of such things as poultry, with
free-range chickens instead of caged layers producing "farm fresh"
Such operations naturally are mostly seasonal and no threat to the
mass market production of commodities but they do offer an
alternative to those farmers who want to stay on the farm and to
I won't take any religion from a man,
who works but with his mouth.
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