What is “Farmers’ Share of Food Dollar?”
The Farmers’ Share of the Food Dollar is the amount of money out of every dollar that actually gets back to the farmer. The data quantifies how much of each dollar that you spend on food is paid to the farmer for growing that food. This data is tracked annual by the US Department of Agriculture Economic Research Service.
The Farmers’ Share is at a record low?
Yes. In 2016, the farmers’ share of the food dollar fell to 14.8 cents, down 4.5 percent from the prior year and the lowest level since 1993 when this data began being collected and calculated. This means that when you spend $1 on food, on average, the farmer is only getting about $0.15 of that dollar and the rest of it is going to transportation, packaging, marketing, etc.
In this case, the opposite is also true: non-farm related marketing associated with the food dollar (transportation, processing, marketing, etc) rose to a record high of 85.2 cents.
Is this really as straightforward as it sounds?
Yes. In fact, if we adjust for inflation and alter all the numbers to 2009 dollars, the farmers’ share of the food dollar was just 12.2 cents. So the actual low of 14.8 cents is even a little optimistic.
But food eaten at home and food eaten out is surely different …
Yes again. Farmers receive more out of each dollar spent on food at home than they receive out of each dollar spent on food at a restaurant. This makes sense … the prepared food at Chili’s is more expensive than what you can prepare at home because Chili’s has to pay waiters, cooks, overhead and more.
And the trend is for Americans to eat more meals out than at home. So that drags the farmers’ share of the food dollar down.
What does this mean for farmers?
Pretty simply, it means that commodity prices are really low, food costs are growing, and when the general American wants to attribute that increased food cost to farmers or farm policies, they are incorrect in doing so. Farmers are receiving less and less of the money you spend on food. More and more of that cash is going to processors, marketers, restaurants, etc.
That doesn’t make any of this inherently bad, but it is important to understand the reality of our food system if we want to change farm policies or try to impact food prices.
ICGA/ICMB Marketing Director