According to a press release I received from the Montana Farm Bureau Federation, consumers are paying slightly more for food at the grocery store now than during the first half of 2014. American Farm Bureau Federation’s Semi-Annual Market Basket Survey found that the total cost of 16 food items that can be used to prepare one or more meals was up $1.06 or a moderate 2 percent compared to their survey conducted about a year ago. Some items like beef, pork and dairy products have gone up in price and others have decreased (the cost of flour is down 7% from last year).
The laws of supply and demand are strong when we purchase food. Higher beef prices are due to lower production, less cows equals higher hamburger costs. Yet for all that, Montana shopper Janet Krob reminds us, “Americans spend just under 10 percent of their disposable annual income on food, the lowest average of any country in the world.”
Laws of supply and demand are not the only market impacts farmers’ face. Through the mid 1970’s farmers share of retail food expenditures was about 1/3, including both food eaten at home and away from home. Farmer’s share of the retail price has been steadily decreasing since then and is now a mere 16 percent. This means the farmer’s share of your $54.26 grocery bill is now about $8.68.
This puts farmers in a bind, small family grow operations find it more difficult to pay increasing equipment, fertilizer, and compliance costs. The price of their product is determined by world markets, so their ability to control their income comes down to increasing yield if possible or cutting costs. Large scale growers are better able to capture economies of scale on the cost cutting end. Purchasing a new tractor from the yield of 100 acres is far more difficult then purchasing the same tractor from the yield of 1,000 acres.
Vince Buys was correct at the debate hosted by the Tea Party on Wednesday. If you want to keep farms you have to make it economically viable for farmers to stay. Just buying their product will not be enough; we all need to become more conscious of the costs we heap on their shoulders.