The Balance of Food Profits: Whom Do You Really Pay For Your Food?

The USDA tracks the value of domestic food expenditures, and also reports what portion of the consumer dollar goes toward labor, packaging, intercity transportation, fuel, pre-tax corporate profits, and farmers. The difference between what the consumer pays and what the farmer gets is called the marketing bill (look at the pink line in the graph). The marketing bill, which “covers processing, wholesaling, transportation, retailing costs, and profits”, or any function beyond the farm but before the household, has been climbing upward since the start of the dataset, in 1967, which means the farmers’ share has been on the decline.



The components of the marketing bill show that, from 1970 to 2006, labor, packaging, fuel, corporate profit, and miscellaneous items (like advertising and promotion, local for-hire transportation, and rent) increased relative to consumer spending, while fuel costs fell slightly relative to spending. The portion of a consumer dollar that a farmer receives fell the most dramatically in relation to consumer spending on food: in 1970, a farmer captured 32.10% of the consumer dollar; in 2006, she got just 18.53%.





These trends suggest that over the last 40 years, it has become more expensive to get food to market. It is worthwhile to note that the farmers’ share of the dollar begins to decrease significantly in the 1980s, right around the time that alternative market channels like farmers’ markets and Community Supported Agriculture (CSA) started gaining popularity. Is it any surprise that farmers would seek the closer connection to consumers that these other economic models afford in a world in which almost all of the functions involved in connecting consumers with their food got a raise while farmers who actually produced the food got, in essence, wage cuts?

Some would say that the functions involved in the food supply chain beyond food production add significant value – the aggregation of supply, the processing, the wholesaling, the marketing, the advertising, the research and development, the store shelves and employees. But perhaps we’re moving beyond the need for those functions as a costly component of our food. The internet levels, liberates, and democratizes industries and supply chains. We should unleash it for the benefit of our farmers and our eaters, instead of continuing to pay for “value” that I, frankly, have a hard time valuing.

This post also appears at www.zocalofood.com/blog.