I remember a speech given in 2012 while I was attending a global roundtable in Dublin, Ireland. The presenter said that the problem with the American food system is that consumers spend less than 10% of their income on food. Of course, he was referencing the European model where, at the time, nearly 20% of household income in the European Union was going to supply food for the family.
Here is the problem, then and now. The farmer is not getting an increased amount of that percentage; it is all going to regulators and those involved in disrupting the food system.
The American Farm Bureau Association issued its annual report on the projected cost of Thanksgiving dinner and to no one’s surprise, it is going to be 20% higher than last year and 36% higher than 2020. That caused me to dive into what consumers pay and how much the farmer receives as a percentage of that cost.
I went to the U.S. Department of Agriculture’s recent report called the Food Dollar Series, and it states that 14.5% of the consumers’ food dollar goes to the farmer. But let’s take a closer look at that number. The USDA figures consider the agribusinesses that most farmers sell their commodities to as part of the farmers’ share. In fact, the USDA data shows 7.4% goes to the farmer and 7.1% to the agribusiness.
For this discussion, I will use 1960 as the benchmark when we start seeing a rapid change in consumers’ food dollar. Although there is one key factor we must all remember about income in 1960. The U.S. median household income in 1960 was $5,315 and the minimum wage was $1.15 an hour.
As I read an article published in JSTOR titled “Food Expenditures in Urban Families 1950-1960,” I found several interesting tidbits. In 1960, people were concerned that the cost of food had increased by 16% since 1950. In 1960, 80% of the meals were consumed in the home. In contrast, today almost 55% of the food dollar is spent away from home.
This concept is highly discussed in the Food Dollar Series, just released from USDA, and gives a summary of food consumed away from home.
“Food-service costs per food dollar increased from 30.1 cents in 2020 to 33.6 cents in 2021. The foodservice share is again at a series high, after increasing for 8 straight years (2012–2019) and sharply decreasing in 2020.”
After spending a mere two hours gathering this data, I now fully understand that all of us in the food production world have been hoodwinked again. I sit here asking myself why have I been bragging for the past 20 years about how little the American food consumer spends for food. We have led down this path to benefit the few and the extreme consolidation in the food system infrastructure.
The movement today is huge in that farmers and ranchers of all types are getting into the business of being a price maker instead of a price taker. We have been involved in since 1995 when we trademarked our own meat label to sell beef and pork. It is a hard row to hoe; selling animals by the trailer load is easy compared to selling them by the piece.
I don’t say that to deter anybody from direct marketing but as a person who was involved, I have been through every pitfall there is. In fact, I will tell you the easy part today is selling it, and the tough part is delivering it. Thanks to social media, finding families interested in your quality farm-raised products is easy but now the hard part: How do you deliver?
In reality, food inflation has not hit the consumer if you still acquire your food the same way your folks did in the 1960s. The increased cost of your Thanksgiving dinner is simply an increase in the number of folks who make a living in between the farm and the fork. This Thanksgiving season we should all ask for guidance to get back to the basics in food purchasing. Happy Thanksgiving.
Editor’s note: The views expressed here are the author’s own and do not represent the views of High Plains Journal. Trent Loos is a sixth generation United States farmer, host of the daily radio show, Loos Tales, and founder of Faces of Agriculture, a non-profit organization putting the human element back into the production of food. Get more information at www.LoosTales.com, or email Trent at [email protected].
