In the third year of an annual study into the farmer’s share of the consumer food dollar, the results are unfortunately consistent.
In a week’s worth of groceries for a family of four, the average farmer’s share is 27.1 percent. The share for grain products is 4.3 percent, for meat it’s 25.1 percent, milk 51.1 percent and vegetables and fruit 28.4 percent. About 89 percent of the foods on the varied week-long menu are produced in Canada.
Results haven’t shifted much over three years. There was a rise of $4.12 in the cost of groceries involved on the week’s menu, bringing the total to $198.95.
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On average, farmers received about one percent more of the consumer dollar in 2010 than they did in 2009. They earned about the same percentage this year as they did in 2008.
The price-tracking project is a joint effort between Wild Rose Agricultural Producers in Alberta, Agricultural Producers Association of Saskatchewan and Keystone Agricultural Producers in Manitoba.
Each year the three general farm groups reach the same conclusion: farmers should earn more of the food dollar.
The Farmers of North America Strategic Agriculture Institute estimates that 86 percent of farmers’ revenue goes to paying input costs. As it rightly notes, “even if the farmgate price increases, there’s no benefit if input costs increase by a similar margin.”
But how can the farmer’s share of the food dollar be increased? In the production chain from farm to plate, which sector should add water to its wine?
KAP president Ian Wishart pulls no punches: “Someone else in the value chain either needs to be more efficient in their processing and their transportation, or take a smaller profit,” he told theProducerlast week.
There is no argument that farmers have consistently become more efficient over the years. Given average commodity prices over time, it’s the only way they’ve managed to continue operations.
In the same week as Wishart’s comment, the Conference Board of Canada, in its twice-annual report on food manufacturing, said the sector recorded a three percent increase in revenues “and an astonishing 30 percent jump in profits.”
Profits were $4.17 billion last year, up $950 million from the previous year. Lower input costs for food manufacturers, including farmgate prices, were a key factor, said the report.
“Many food manufacturing companies benefitted from lower commodity and energy prices during 2009,” it said. Modest profit growth is expected through to 2014.
It is telling that the food dollar study showed that less-processed foods such as vegetables often show a greater return to the farmer.
But local sales and minimal processing are not an option for grain and livestock producers who make up the majority of prairie farmers.
A healthy food processing and manufacturing sector is vital to agricultural commodity markets and to the health of the overall agricultural economy.
The same can be said for the retail food sector. The question, of course, is how much each link in the food chain should earn.
Even if that question could be answered to everyone’s satisfaction, which will occur only when pigs learn to fly, it would require additional regulation that is anathema to farmers, processors and retailers alike.
Nevertheless, the conclusion from the study is true. Farmers deserve and require a higher percentage of the consumer food dollar.
It’s important for consumers to know that even a relatively small percentage increase in the farmer’s share can make the difference to farmer profitability, while having a negligible effect on the cost of food.
Bruce Dyck, Terry Fries, Barb Glen and D’Arce McMillan collaborate in the writing of Western Producer editorials.
