Economic Development and Food Service & Agriculture

Farmers’ share of food dollar hits record low

Producers say they can’t compensate for rising labor costs.

May 18, 2018
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American farmers are earning less than ever before.

According to the Michigan Farm Bureau, farmers’ share of the food dollar amount decreased nationally in 2016 to 14.8 cents per dollar, which is a 4.5 percent decline from the previous year and the lowest since the report began in 1993.

In 2015, MFB estimated that farmers’ shares were 18.9 cents per dollar.

The recent report, which was first released in April by the U.S. Department of Agriculture Economic Research Service’s Food Dollar Series, is updated every even year.

It measures annual expenditures by U.S. consumers on domestically produced food.

USDA Economic Research Service’s Food Dollar Series evaluates farmers’ shares in three series: the marketing bill series, industry group series and the primary factor series.

Michigan Farm Bureau Field Crops Specialist Kate Thiel said the other 85.2 cents per dollar is attributed to transportation, processing and marketing.

Gordie Moeller, a food security advocate in West Michigan, said he doesn’t believe apple growers struggled as much with low prices as crops, beef and milk producers.

Denny Heffron, owner of Heffron Farm in Belding, operates 5,000 acres of corn, hay, soybeans. He also raises beef cattle and owns four farm markets, with two locations in Grand Rapids, one in Wyoming and another on his farm. In addition to selling his produce, Heffron also markets the produce of other farmers.

He also sells his produce to restaurants like Salt of the Earth, Grand Rapids Brewing Co., and Brewery Vivant.

Heffron said labor costs have gone up, but the value the farmers are getting has gone down, and farmers, therefore, are not getting enough money to compensate for the additional cost.

“The cost to raise (cattle) has steadily gone up, but what we are able to get for it has not gone up accordingly,” Heffron said. “We don’t process our meat, so we have to hire someone, and we just had a big increase in processing because of labor. It is very difficult to find good labor. The prices of what we are selling have not gone up.”

He said the reason the price for crops has not gone up is that farmers have to compete on the world market.

“They grow soybeans, corn, wheat and cattle, too, in a lot of places around the world,” Heffron said, “For example, a while ago McDonald’s said they were going to import meat from Argentina, I think, so we have to compete with the rest of the world.

“A lot of the prices around the world are a lot cheaper; their regulations are less, so it makes it harder and harder to do business here when we have the cost like we have here.”

Joe Klein is an apple grower and the chairman of Jack Brown Produce, a Sparta-based apple packer, shipper and exporter. He said the price for apples has not changed much except during the 2017 apple season, and he attributes that to the state of Washington.

“Washington had a large crop of apples, especially smaller apples, and that impacted Michigan apples because we generally grow smaller apples in our market,” Klein said. “Our market is usually a bag market, which has smaller apples. They sold smaller apples than they usually would grow and encroached on our market.”

Klein said other than the 2017 apple season, apple growers haven’t seen a fluctuation in their price.

“It could be this year,” Klein said. “Hopefully, nothing bad happens because the spring has been so favorable to us. If nothing happens — we are a long way from September — we could be sitting on a large crop, but we’ll have to see what the other states do.”

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