What does a dollar buy you? An avocado, an apple, an orange, a head of cabbage?
Yes, but how much of that dollar goes to the grower? How much of that greenback goes to the trucker, to the wholesaler? How much of that 100 cents does the retailer keep?
The U.S. Department of Agriculture’s Food Dollar Series was updated March 16, and that data answers those questions.
From the report: What is the cost of marketing the farm commodities contained in a typical $1 food purchase?
For the overall food at home dollar in 2015, the farm share was 24.1 cents and the marketing share was 75.9 cents, according to the USDA.
What cost is added by each supply chain industry group to the food dollar?
The 2015 report attributed 13.5 cents to farm production, 23.3 cents to the retail trade, 14.4 cents to the wholesale trade, 5.1 cents to transportation and 3 cents for packaging.
By way of comparison, 1993 figures the marketing share of the food dollar was split with 76.2 cents for marketing and 23.8 cents for the farm share. The 1993 report showed the food at home dollar was split with 11.6 cents for farm production, 21.6 cents for retail, 13.7 cents for wholesale, 5.2 cents for transportation and 4.9 cents for packaging.
The most recent data for fresh fruit comes 2007.
For that year, the industry group dollar for fresh fruit for at home consumption was broken down as:
- agribusiness, 4.5 cents;
- farm production, 35.7 cents;
- transportation, 5 cents;
- wholesale trade 16.3 cents;
- retail trade, 25 cents;
- energy 5 cents
- finance and insurance, 3.5 cents; and
- other, 4.9 cents.
For fresh vegetables, the 2007 dollar was sliced in a similar way:
- agribusiness, 5.3 cents;
- farm production, 35.5 cents;
- transportation, 5.5 cents;
- wholesale trade, 17 cents;
- retail trade, 24 cents;
- energy, 5.1 cents;
- finance and insurance, 2.6 cents; and
- other, 5.2 cents.
The USDA estimates the farm value share of a retail basket of fresh vegetables at 28% in 2015, compared with 25% in 2014 and 27% in 2013.
For fresh fruit, the farm value share of a retail fresh fruit basket was 38% in 2015, up from 35% in 2014 and 2013.
The National Farmers Union has a website dedicated to detailing the “farmer’s share” of various commodities, including tomatoes, lettuce and carrots.
From the website:
“Did you know that farmers and ranchers receive only 17.4* cents of every food dollar that consumers spend on food at home and away from home? According to USDA, off farm costs including marketing, processing, wholesaling, distribution and retailing account for more than 80 cents of every food dollar spent in the United States.”
According to the website, farmers receive only 28 cents of a $3.99 retail price per pound for tomatoes, 29 cents of a $2.79 retail price for one pound of lettuce.
How will the narrative change on farm/retail shares in the years ahead? Don’t look for any dramatic changes.
Perhaps the evolution of e-commerce models will help increase the farmer’s share of the food dollar. Some fresh produce marketers will attempt to sell proprietary/limited volume varieties direct to consumers and thus gain more of the marketing dollar.
In general, however, the farmer’s share of the food dollar will continue to be pocket change compared with marketing costs.