Farmer's 50-year returns not exactly breathtaking

All the complaining about the cost of the new farm bill needs to be put into perspective, says Union City, Tenn., farmer Bill Grasfeder.

For example, he notes, a bushel of corn in 1950 was $1.52; in 2002, the cash price is $1.98, a 30-percent increase; for wheat, $2.00 in 1950 and $2.80 now, up 40 percent; for soybeans, $2.47 in 1950 versus $5.00 today, up 102 percent; and cotton, 40 cents a pound in 1950 and 52 cents today, up 30 percent. Add government program payments and the 2002 prices/percent increase equate to: corn, $2.26/48 percent; wheat, $3.32/66 percent; soybeans, $5.44/120 percent; and cotton, 59 cents/47 percent. For these four commodities combined, government payments represent just a shade over 11 percent of the final price.

Factoring in inflation over 50 years and the stratospheric rise in input costs, the farmer's fortunes haven't exactly been breathtaking. (See graph on Page 11 for recent trends in farm prices and costs of inputs.)

During the same period, Grasfeder notes, the minimum wage has gone from 75 cents to $5.85, up 680 percent; the average yearly household income from $3,815 to $68,300, up 1690 percent; a U.S. senator's salary, from $12,500 to $145,100, up 1060 percent; a new house, from $14,500 to $210,000, up 1348 percent; and a new car, from $1750 to $21,012, up 1100 percent.

The average American spends 11 percent of his income for the best, safest, most-varied food in the world — far less than any other developed nation, Grasfeder says. Yet, during the past 50 years, the USDA reports, the farmer's share of the food dollar has dropped from 38 cents to about 20 cents, the difference going to increased processing, distribution, and marketing costs.

So, Grasfeder asks, “Who's subsidizing whom?”

At a recent conference, I chatted with a California grower. “We have 3,000 acres,” he said. “Our revenue's about $2 million a year. Out of that $2 million, if everything goes well, we end up with about $70,000, a bit over 3 percent. Not a terribly great return on the investment, considering all the risk.

“I get $100 a ton for my wheat. That same ton at retail is worth $7,000. I get about $200-$250 for a bale of my cotton; depending on what it's used for, its retail worth is $8,000 to $10,000. We growers are at the mercy of the market when we sell our products, whether we make a profit or lose money. But everyone else along the processing/marketing chain adds his markup.

“I've had friends tell me, ‘Well, I'd be willing to pay another 5 cents or 10 cents for a loaf of bread if it would mean the farmer would get more money. I try and explain to them that it doesn't work that way, that the retail price has nothing to do with what the farmer gets. Consumers don't have a clue how little of their supermarket dollar actually goes to the farmer and how much goes to all the middlemen. They just know the shelves are always bulging with food; they don't care how it got there or that the farmer's constantly walking a thin line between survival and bankruptcy.”

e-mail: [email protected].

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