How Efficient Agriculture Impacts Food Prices

Telling Your Story

Farm families feel the same food price impacts that non-farm families do.

Published on: May 31, 2013

Food prices have been getting a lot of press lately.  So what are the components that impact our food prices?  How do those relate to you at the farm level?

According to the United Nations Food and Agriculture Organization, people in the United States spend on average about 10% of our income on food compared to 18 to 25% around the world. 

Of course that needs to be put in context. The poorest of the poor might spend half or more of their income on food, simply because they are poor.  The United States also has the luxury of having a wide variety of food choices.

In light of last summer's drought, USDA created an infographic on historical food price inflation and what they were projecting for 2013. 

According to CommonGround's website, farmers today receive about 12 cents of every dollar spent at the grocery store.  In 1950, farmers received more than 40 cents for every food dollar that consumers spent at the grocery store.  USDA's Economic Research Service reports that the other 88 cents of the dollar spent at the grocery store include the costs associated with things such as transportation, packaging, and marketing.  There is an infographic on CommonGround's website further breaking down the "other" costs of the food dollar. 

A recent Rabobank Food and Agribusiness Research report indicates that people are either buying basic value or high-end premium products at the grocery store.  See this Farm Futures article for more details.  It's interesting to observe how some people are choosing to spend more on higher end food products that are perceived to be of higher quality.  At the other end of the spectrum is the value products and extreme couponing. 

As a farmer, you are in a unique position of one who not only produces food but are also a consumer at the grocery store.  Food prices impact your family just as they impact the general population.