What’s in a dollar?

April 7, 2011

It’s always the same. Food prices rise, grocery bills get bigger, and the media take to their exposes about big, bad agribusiness taking money from the cash-strapped American consumer.

But a recent study released by the USDA, may have some reporters rewriting their copy.

The report, titled,  “A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs,” states that farmers in the U.S. are only making 11.6 cents for each dollar that consumers spend on food.

The other 88 cents? That goes to the processing, packaging, transportation, retail, food service, energy, and finance to market each product to consumers. 

While this may come as a shock to some, it’s relatively old news.

In a January interview with National Public Radio (NPR), Brookings Institute rep, Homi Kharas, discussed this break down of food cost when asked about rising global food prices, no small acknowledgement, considering the group is typically quick to blame U.S. farm policy for driving down global commodity prices.

According to NPR, “[Kharas] says that when a U.S. consumer buys a box of cereal or a cup of Starbucks coffee, she is mostly paying for the packaging, marketing, and attractive store fixtures.  So the shopper is not greatly affected by the underlying commodity price…”

The thin green line of 210,000 farmers that are left to feed and clothe the American people are not the reason that our grocery bills are getting bigger. Indeed, they are the reason our grocery bills are relatively low.

Rather than blaming farmers for our expenses, we should be thanking them for the work that they do. “Some years we make things work a lot better than others,” said Dick Gallagher, a Nebraskan corn grower, when asked how operations are maintained on such small margins in an interview with Nebraska Radio Network. “It’s a combination of everything, I guess, as a farmer, we’re just eternally optimistic and we just keep movin’ on.”

To learn more about the farmer’s share, click here.