Almost everything from the price of a dinner out to the cost to heat one’s home seems to take a bigger chunk out of the wallet lately.
According to the Consumer Price Index, the overall cost of goods rose 2.4 percent in January. Even as grocery store prices rose, the farmer’s share of the food dollar, decreased to 11.8 cents for every dollar spent.
For many Americans, dollars spent at the grocery store equate directly to money in the pockets of food producers. However, the road between the store shelf and the farm gate is a long, winding one, which is what makes the new U.S. Department of Agriculture (USDA) data so enlightening.
So, if farmers are pocketing 11.8 cents of every dollar spent, where are the other 88.2 going?
It’s divided between the other businesses involved in “transporting, processing, storing, wholesaling, and retailing food” and is called the “market share.” While farmers grow the food, there is a whole team of people that are required to get it from a field to the store, the “marketing” arm of food production.
The trouble is the farmer’s share continues to shrink in an era when policy makes growing food continuously more expensive. Farm inputs have been trending upward since 2020 and show no signs of declining. So much so, according to the new data, we’re seeing an uptick in Chapter 12, farm specific, bankruptcy filings across the U.S.
However, Chapter 12 bankruptcy filings may show an incomplete picture of farm finances. To be eligible to file, a farm household must derive most of its income from the farm. According to USDA data, many U.S. farmers require off-farm income to survive. Reports show the average total farm income hovers around $102,000 annually, with $86,900, or 84.5 percent, coming from off-farm jobs.
Much has been made about getting grocery prices “under control.” An American family of two children between the ages of 6-11 and two parents will spend approximately $1,360 on groceries monthly, according to USDA. Food producers will earn only about $123.64 a month.
There is no perfect way to bulletproof our agricultural framework. The best we can do is work toward making it more stable than it currently is.
Introducing more stability means first focusing our purchasing habits on foods produced as close by as possible. By addressing the production abundance within the U.S., we can incentivize the growing of more fresh food items and fewer commodity crops.
Then, we should work toward repairing our trade partnerships that have been severed or damaged through the ongoing tariff tit-for-tat, with the goal of regaining our place as a net exporter of the crops we have become so adept at cultivating.
Finally, we must empower our food producers to compete in a marketplace that rewards innovation, environmental stewardship, recognition of consumer demands, and elevates farming back to what it once was – a pillar of our nation.
While the farmer’s share of the grocery dollar may be dwindling, it does not have to be the death knell for our food producers or our food supply. It should serve as a change agent to usher in a new beginning for American agriculture.
Pam Lewison is a fourth-generation farmer, Pacific Research Institute fellow, and ag research director for Washington Policy Center.