When the cost of produce goes up at our local grocery store, it directly impacts our weekly finances, and we all want to know who is to blame. Is it the farmer? The grocer? The weather? It’s easier with other products, for example gas for our cars. We can blame the oil cartels or some faraway pipeline problem. Either way, we usually end having to find a way to make it work. We start to look for the best value for our dollar—start biking to work, clipping coupons, evaluating our food choices. At the end of the day, we want to make sure we are not the victims of greed. We certainly don’t want to make someone rich while they are making us suffer! Do the big oil companies really need more profit?
With produce it’s a different story. Usually when the price of produce goes up, crop failure due to weather conditions is to blame. The retail prices increase when the supply decreases. And the ones who take the greatest risk are the farmers. So they must also reap the greatest rewards? Actually, no. By the time the retail cost paid by the consumer is broken down into what it costs for each link in the chain from the farmers field to the grocers shelf, the farmer actually gets a very small percentage of the profit. Statistics from a National Farmers Union report from 2013, using data from the USDA Economic Research Service, shows that on average, growers get back only 15.8 cents of every food dollar spent in the United States—only about 15% of each dollar spent! Looking at the data closer, more than 80 cents of every food dollar (80% of the cost) goes to the transportation, distribution, marketing, processing, wholesaling, and retailing of our food.
Let’s look at specific example from the heart of potato country in Wisconsin’s Central Sands. For a 5 pound bag of potatoes (retailing nationally at an average of $4.39 per bag), potato growers on average only get back 33 cents—less than 8% of the retail cost goes back to the growers and to the farmland that produced it!
How is all this bounty possible with such small returns on the farm? As margins become tighter, the key to maintaining economic sustainability on the farm and providing affordable food to consumers, is to become more productive with the agricultural lands we have. The potato growers of Central Wisconsin have excelled in this regard, consistently producing more for less using more efficient agricultural inputs, less water and nutrients and increasing productivity to maintain the safe, healthy and abundant food supply we need. USDA production statistics show that in the decade between 1996 and 2006, potato acreage in Central Wisconsin decreased from 60,000 to 43,000 acres (28%) and yet growers were able to produce almost as many potatoes on the reduced land area. These increases in productivity result from the innovation of potato growers and translate directly into more savings for your pocketbook.
From that small 8% return the growers not only plant and nourish the crop, protect it from pests and harvest, store and market the final product, but they are also making a huge contribution to the rural communities in which they farm; good jobs with benefits, healthy landscapes with green spaces, biodiversity and environmental areas are all of part of the intrinsic values our produce growers bring to our state and local communities.
So remember that while we all hate to see higher prices in the stores, we need to remember that not only is a 5 pound bag an incredibly inexpensive, healthy produce option for your family but also that our growers are getting very little of your food dollar. Even so, they are doing everything possible to keep retail prices at affordable levels by being more efficient while continuing to provide multiple benefits to our society.