-A LOOK AT WHO'S GOBBLING UP AMERICA'S FOOD DOLLAR:
AGRIBUSINESS SHORTCHANGING FARMERS AND CONSUMERS
-FARMERS' SHARE OF FOOD DOLLAR CONTINUES TO DROP
-GAP GROWS BETWEEN FARM AND RETAIL PRICES
-AGRIBUSINESS SETS FOOD PRICES FROM FARM TO FORK
RESOURCES
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A LOOK AT WHO'S GOBBLING UP AMERICA'S FOOD DOLLAR:
AGRIBUSINESS SHORTCHANGING FARMERS AND CONSUMERS
This year's poor weather is a concern not only to America's farmers,
but to some consumers who worry that reduced crop harvests will
mean higher prices for their food at the grocery store. Economists
predict food prices will rise slightly this year -- but not as a result of
higher prices at the farmgate. The correlation between farm prices
and food prices has become almost non-existent as a result of
increasing corporate consolidation in the food sector. Shrinking
competition in the food industry has enabled agribusinesses to pay
farmers below their costs of production for raw food products while
increasing the prices consumers pay at the retail level. Meanwhile,
agribusiness corporations who control the transport, processing,
marketing and retailing of our food enjoy record profits, despite very
little increases in the costs of providing these services. As more and
more corporations merge, they are able to control the price of food
from farm to fork year round -- paying farmers less and charging
consumers more. America's farmers and consumers are being
shortchanged.
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FARMERS' SHARE OF FOOD DOLLAR CONTINUES TO DROP
As consumer prices rise, farmers' share of the food dollar has
continued to slide. Since 1980, when farmers earned 37 cents for
every dollar spent on food by consumers, their share has fallen 40
percent. Farmers now earn only 22 cents from every food dollar.
The most dramatic decline in farm share has been seen in the cereal
sector. For every dollar consumers spend on Corn Flakes, Wheaties
and other cereals, farmers now earn only 8 cents.
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GAP GROWS BETWEEN FARM AND RETAIL PRICES
The correlation between the prices farmers receive for their crops
and the prices consumers pay at their local grocery stores has been
declining in several food sectors for the past 10 years. The farm-to-
retail price spread, which measures the difference between the retail
price and the farm value of food, has risen every year since 1984;
widening to more than 70 percent on average. The spread for dairy,
meat and cereal products increased almost 80 percent.
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AGRIBUSINESS SETS FOOD PRICES FROM FARM TO FORK
Agribusiness corporations have come under heavy attack recently
amid charges of price fixing and manipulation of federal policies.
Consumers and farmers, who are fed up with paying inflated prices
for their cereals, breads, bacon and milk, are forcing the government
to investigate agribusiness for their alleged monopolistic practices.
CEREAL
Cereal prices have skyrocketed 90 percent since 1985 -- far
outpacing price hikes in other food sectors. As a result of consumer
outcry, Representatives Charles Schumer (D-NY) and Sam Gejdenson
(D-CT) have asked the U.S. Department of Justice to investigate
whether four big cereals companies are behind the drastic price
increases. If found guilty of price collusion, General Mills, Quaker
Oats, Kellogg and Post, which control 85 percent of the nation's
ready-to-eat cereals market, will be in violation of the nation's
antitrust laws.
PORK
Although hog prices paid to farmers dropped up to 33 percent this
year, consumer prices for pork declined only 1 percent at the grocery
store. Where's the other 32 percent going? Directly into the balance
sheets of several major pork processing companies that control the
bulk of the hog market. Thirteen representatives of the Campaign
for Family Farms and the Environment met with Agriculture
Secretary Dan Glickman June 14 to address ways to end meatpackers'
discrimination against independent hog producers and needed
enforcement of the Packers and Stockyards Act. "The Secretary told
us that he has concerns similar to ours regarding fair access to
markets and corporate concentration," said Mark Schultz, policy
director of the Land Stewardship Project. Secretary Glickman
committed to meet this summer with family farmers and rural
residents in affected states to hear first hand about the impacts of
factory farming and price discrimination.
BEEF
Four beef packing corporations who control 82 percent of the cattle
market have been pushing farm prices down far below producers'
costs of production, while passing along little of the savings to
consumers. At the urging of the Western Organization of Resource
Councils (WORC), Congress appropriated funds in 1992 to the federal
Packers and Stockyards Administration to study corporate
concentration in the livestock sector. The Administration will
produce a final report in December. But WORC Program Director John
Smillie says the report, while a good step, will not take into account
the dramatic price gaps occurring over the past two years. "Cattle
prices have dropped up to 25 percent since 1994," says Smillie. "The
industry told us cheap prices were a result of over supply. If that's
true, then how come the laws of supply and demand didn't bring
down retail prices for meat at the grocery store?" Over the same
period, IBP, ConAgra and Cargill, which control most of the beef
packing market, registered up to 100 percent profit increases.
DAIRY
Retail prices for milk have also failed to reflect cheap dairy prices
being paid to farmers. Since 1980, prices charged for a gallon of milk
have risen more than 15 percent, while the prices paid to dairy
farmers have dropped up to 14 percent. "There's no correlation
between milk prices paid by consumers and those prices received by
dairy farmers," notes Lee Light of Rural Vermont. Representative
Bernie Sanders will introduce legislation this week to Congress that
would provide a minimum wage for dairy farmers while providing
milk to low-income families through targeted programs. The Dairy
Nutrition and Conservation Act of 1995 "would be run by a board of
farmers and consumers who will have the responsibility of ensuring
that price gauging does not occur," says Light, who helped draft the
Sanders bill.
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RESOURCES
For more information contact the following:
Campaign for Family Farms and the Environment, Mark Schultz,
612-823-5221
Rural Vermont, Lee Light, 802-223-7222
Western Organization of Resource Councils, John Smillie, 406-252-
9672.
Prairie Fire Rural Action, Al Krebs, 515-244-5671
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Next Edition of FARM AID NEWS: "Strengthening Rural-Urban Links:
Fostering Food Security"
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We welcome comments and suggestions: contact Harry Smith at
FARM AID, (617) 354-2922. We encourage the reproduction of
FARM AID NEWS. Produced by The Institute for Agriculture and
Trade Policy (IATP) for FARM AID. Editors: Gigi DiGiacomo and
Harry Smith. For information on other agriculture bulletins, contact
IATP: (612) 379-5980.
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