Farmers vs. Packaging
You may have noticed that your recent grocery bills aren’t getting any smaller. With the rising cost of oil and extreme weather patterns that have left farm communities ravaged, it appears that high food prices aren’t going anywhere. With the the prices rising, many think that it’s the farmers who are benefiting from these rising prices. This is wrong.
The Hand That Feeds The US said, “Farmers are often unfairly held responsible for high grocery prices, when in reality they receive just 15.8 cents for every food dollar that consumers spend in the store.” Surprisingly, the share is down 3.2 cents from last year, and is a long fall from the 40 cents for every food dollar that farmers received in 1950. This means that it really isn’t the farmers who are profiting from the fact that prices simply continue to go up. The extra 15.8 cents don’t go to the farmers back pocket either. This money is used to help cover the costs of running the farm. Farmers then have to rely on high yields and market prices to break even.
As for the other 84.2 cents, it doesn’t go to the farmers. It pays for the marketing, processing, wholesaling, distribution, and retailing of the product. These are all factors the farmer has no say in once they sell the product to food manufacturers.
The Hand That Feeds The US also said, “In addition to these costs, food prices tend to be “sticky” meaning that when they rise it is very unlikely that they will fall again. That’s because most food manufacturers are quick to pass along higher commodity prices to shoppers, claiming that they just can’t sustain the business unless they raise prices.” Then, when prices drop, customers never see the savings that are occurring.
Conclusively, while food company profits, commodity prices and food prices continue to rise, the farmer’s share remains relatively unchanged. Next time you pick up your favorite snack and are shocked by its high price, don’t be so quick to blame the man in the field. Rather, look a little closer at that shiny packaging. It might not have any nutritional content, but it surely adds value.