Food Dollar, then and now

I clearly remember a speech given in 2012 while as 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 EU 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.

Last week the American Farm Bureau issued their 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. All of that has caused me to do a deep

dive into what consumers pay and how much the farmer receives as a percentage

of that cost.

I went straight to the USDA data as they have recently completed a report called

the Food Dollar Series, and it boldly 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 accompanied picture shows 7.4% goes to the

farmer and 7.1% to the agribusiness. This likely explains why we have seen the

exodus of so many farmers since 1960.

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

$5315 and the minimum wage was $1.15/hour.

As I read an article published in JSTOR entitled Food Expenditures in Urban Families

1950-1960, I found a couple of interesting tidbits. In 1960, folks were concerned

that the cost of food had increased by 16% since 1950. The thing that jumps out at

me is that in 1960 80% of the meals were consumed in the home. In contrast, in

the United States 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.

I must tell you that after spending a mere 2 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. I must warn you

that this a segment we have been involved in since 1995 when we trademarked our

own meat label to sell beef and pork. Folks, 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, 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?

I remember as a kid in the late 1960’s, I would go to Quincy with my Grandpa

Calvin J Loos to peddle eggs. He had a specific route with customers who expected

him to show up every week and then we would go to the store and buy what

grandma needed with the egg money.

In reality, food inflation has not hit the consumer if you still acquire your food the

same way your folks did in the 1960’s. The increased cost of your Thanksgiving

dinner is simply an increase in the number of folks that make a living in between

the farm and the fork. In our blessings at the Thanksgiving table this week we

should all ask for guidance to get back to the basics in food purchasing. Happy

Thanksgiving!!