Farm share of food dollar dwindles

USDA has crunched the numbers on the farmer’s share of the consumer food dollar, showing the smallest piece of the pie since 1993.

The farmer’s take stood at 14.8 cents in 2016 (the most recent data) with the other 85.2 cents claimed by sectors off the farm and up the chain, such as processors, wholesalers, retailers and restaurants.

That’s a 4.5 percent decline from 2015 and nearly a 14 percent drop from 2014. It’s also the all-time lowest share since the USDA Economic Research Service began the Food Dollar series 25 years ago.

“It kind of tells me the farmer’s share of what the consumer is eating is getting smaller,” John Newton, director of market intelligence for the American Farm Bureau Federation, said.

Adjusted for inflation, the real farm share is 12.2 cents compared with the baseline share of 17.5 cents in 1993, he said.

Low commodity prices in an extended recession in agriculture — with a 12-year low in farm income — is one reason for the shrinking farm share. The other is that more and more consumers are eating away from home, he said.

Foodservice claimed the largest portion — 36.3 cents — of the consumer food dollar in 2016, trailed by food processors with 15.2 cents, ERS reported.

The farm share of the food dollar spent at restaurants is less than a nickel, Newton said.

The farm share of the food dollar represents what portion goes back to the farm, but the farmer also has to pay for input costs, he said.

That puts the farmer’s share of 14.8 cents at less than 8 cents when factoring in the cost to raise crops and livestock, he said.

The farm share can improve, but “we’re going to have to see commodity prices rise,” he said.

Many factors affect the farm share, Patrick Canning, ERS agricultural economist, said in an email to Capital Press.

The main ones are the prices received by farmers from their commodity sales, the amount of processing for the farm commodities purchased in grocery stores and restaurants, the share of total food spending away from home and the cost of all post-farm marketing services, he said.

“There are many factors behind the decline in the farm share over the past few years, but the main factors appear to be declining farm commodity prices, an increasing share of food dollars spent eating out and increasing prices for foodservices when eating out,” he said.