Farm (Bottom) Dollar
When we think of the holidays, we think of getting together with our families, eating and sharing gifts with loved ones. A giant elephant in the room not often discussed over Christmas dinner prime rib, however, is the cost of holidays and on a broader spectrum, money.
I get it, I don’t like to talk about money either, but today, I’ll grin and bear it because the U.S. Department of Agriculture (USDA) just released their 2021 report on the U.S. food dollar.
For all intents and purposes, a “farm” in this column refers to any agricultural operation, and “farm production” refers to all establishments classified within the agriculture, forestry, fishing and hunting industries.
USDA reports the farm share on the U.S. food dollar for 2021 hit an all-time low at 14.5 cents. This number has dominated headlines all week, but what I want to talk about is the sub-groups within the farm dollar, because this is where the money is really going.
Per the USDA, a food dollar represents a one dollar expenditure on domestically-produced food by U.S. consumers. The food dollar is allocated to expenditures on each of the various food commodities sold in proportions representing their share of annual sales in the U.S. market.
The “farm dollar” is actually part of the “Farm Dollar Series,” and has been analyzed by the USDA since 1993. There are three primary series for the farm dollar. These include the marketing bill series, the industry group series and the primary factor series.
For each primary Food Dollar Series, the combined input-component values are equal to the one dollar output-market value. The three series represents distinct perspectives on the sources of market value for the combined annual food dollar expenditures.
And, while 14.5 cents seems like a small number, it’s only the number reported in the marketing bill series. If you dig a little deeper – you reach information on the industry bill series, and this is where you see some super small numbers.
The USDA analyzes 12 industry groups and their share of the farm dollar. Included in these 12 groups is agribusiness, food production, food processing, packaging, transportation, wholesale trade, retail trade, food service, energy, finance and insurance, advertising and legal and accounting – all valuable areas which contribute to food getting from gate to plate.
However, as I write this column for an audience of ranchers and farmers, I realize I am about to be the bearer of bad news. Where one would believe the farm production group should be the king of the castle, pulling in the most percentage of the farm dollar, one would be wrong.
There are four groups taking up way more of the farm dollar than farmers and ranchers with food services raking in 33.6 percent of the Industry Group Series Farm Dollar, followed by food processing at 15.2 percent, retail trade at 12.7 percent and wholesale trade at 10.7 percent.
Farm production takes up 7.4 percent of the Industry Group Series Farm Dollar ahead of finance and insurance at 3.6 percent, transportation at 3.6 percent, energy at 3.2 percent, advertising at three percent, packaging at 2.9 percent and “other” at four percent.
So, to put this into perspective, I bought three chicken breasts at a local grocery store the other day and paid $7.39 for the whole package. If I base my numbers off of the 7.4 percent or 7.4 cents out of every one dollar, this means the farmer who raised the birds keep only got about 55 cents from my purchase.
Now don’t get me wrong here, I appreciate all other industry groups, but food service takes up a third of every food-related dollar? I love eating out at a nice restaurant, but this doesn’t make a whole lot of sense to me.
If I’m being honest, this report really bothered me. Farmers and ranchers are constantly being named as the bad guy when food prices spike at the grocery store or restaurants, but when we only have a say in 7.4 percent of the consumers’ food cost, how can we be the greedy ones?
At this point, I wish we were the greedy ones. I wish we had a bigger piece of the pie and more control on how much food in our country costs, but we don’t, and I don’t know if we ever will again. I guess the “direct-to-consumer” people have the right idea. Sure, they have more input costs than the rest of us, but at least they’ve cut out the middle man.
I encourage everyone reading this column to head on over to ers.usda.gov/data-products/food-dollar-series/documentation.aspx to learn more about the food dollar and how we can make our percentage larger in years to come.
I also encourage everyone to not bring the farm dollar issue up over Christmas Day prime rib as it will most likely cause a few fists to pound on your beautifully set table, could make someone choke the minute they heard the number 7.4 and will absolutely incite mothers covering the ears of their children as to not hear the words coming out of your mouth.