Where does your food dollar go?
By Sean Ellis
Idaho Farm Bureau Federation
POCATELLO – The food you buy from the store or restaurant doesn’t get there by itself. Obviously.
Everyone should know that.
But a food item’s journey from farm or ranch to the store is a lot more complicated than most people probably realize.
“I don’t think most people even care about that process, unless the shelves are empty; then they start thinking about it,” says Doug Gross, a Wilder farmer who grows potatoes for the processing industry. “It’s not nearly as simple as people might think.”
There are several steps involved in the food supply chain, which is a food item’s journey from farm to store. All of these steps are necessary but by the time food is sold to a consumer at the grocery store or other eatery, the farmer’s share of the retail food dollar is pretty small.
According to estimates by USDA’s Economic Research Service, a farmer gets, on average, 7.6 cents of every dollar spent on food in the United States.
The rest is divided up between the different parts of the food supply chain: transportation, processing, packaging, advertising, agribusiness, wholesale trade, retail trade, food service and legal and accounting.
“There are a lot of hands in the (food dollar) pot before food gets to the grocery store,” says Rockland wheat farmer Cory Kress. “It doesn’t matter what the commodity price is, a farmer’s share of the food dollar pie doesn’t change that much.”
The vast majority of what Americans pay for food “is certainly not going in the farmer’s pocket, that’s for sure,” says Oakley potato farmer Randy Hardy.
He provided an example of what a farmer might get for his commodity.
Say you pay $1 at a fast-food establishment for 8 ounces of French fries. That equals out to $200 for 100 pounds of spuds. The grower will get about $8 of that. That’s actually only 4 percent of what that 100 pounds of potatoes ultimately sold for.
Kress says it’s important to know that farmers are price takers and not price makers.
“Farmers are the only ones in the entire supply chain that don’t set their prices,” he says.
When it comes to divvying up the average food dollar, agricultural producers are at the back of the line, says JC Management Co. President Clark Johnston, who contracts with Idaho Farm Bureau Federation to help farmers and ranchers develop individual marketing plans.
“The guy at the bottom of the totem pole is the producer,” he says. “If I’m down here at the flour mill or the feed mill and my costs go up, I just pass that on. But if I’m the producer and my costs go up, I don’t get to pass that on. I’m still at the mercy of the market.”
The first step of the food supply chain is, of course, the farm or ranch. That’s also the most important step and one where technology plays a major role.
“I don’t think most people realize how sophisticated food production is these days,” says Idaho Wheat Commission Executive Director Casey Chumrau. “Farmers and ranchers today rely heavily on science and technology to produce the healthiest food in the most efficient and sustainable manner.”
Total food production in the U.S. continues to increase despite decreasing acres dedicated to agriculture, she adds. “At the same time, growers have been able to reduce the use of pesticides, water, and tillage thanks to the advancements in technology.”
After harvest, food has to be transported, packaged, washed, processed, and then transported again. That transportation process involves a lot of trucks but also boats, trains and sometimes airplanes.
That whole process, which involves storage for some commodities, such as potatoes and onions, involves lots of manpower.
“There are a lot of hoops the farmer has to go through to grow the type of quality food that American customers have become accustomed to and get it to the store,” Gross says.
“We are very fortunate in this country to find so much variety at the grocery store and rarely question the quality or freshness of our food,” Chumrau says.
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