New Food Dollar Reports Shows Farmer's Share Shrinking

Smith: New estimates from the Department of Agriculture tell us that the farmer's share of the food dollar keeps shrinking. Faith Parum, an economist with the American Farm Bureau Federation, says that the number varies slightly by commodity.

Parum: The farmers receive less than six cents of the industry dollar. 2.5 cents of that is crop farmers, and 3.3 of that is livestock producers. So, what that means is, after accounting for production expenses, every dollar that America spends on food, 5.8 cents is going back to the farmer.

Smith: The USDA uses data from the Bureau of Economic Analysis to come up with the report numbers, considering a variety of factors.

Parum: How much of that dollar is put in each commodity. So, you can imagine something like eggs, where there's minimal processing and minimal labor involved, might have a higher share of the food dollar. Then we think about something like snack food that has obviously gone through a lot of processing, labor, there's a lot of marketing involved, and so the farmer's share is less, in that case.

Smith: The Food Dollar Report shows that even when grocery store prices go up, farmers are still price takers, not price makers.

Parum: We'll continue to see headwinds in the farm economy despite higher grocery store prices or despite inflation, because the farmer's share of that is so small, and that's because the majority of that money is going to that further processing, food services, storage, marketing, and not directly back to the farm gate.

Smith: Learn more on the Market Intel page at fb.org. Chad Smith, Washington.