Food prices are growing, but farmers' share of the profit is not

ON THE FARM

May 25, 2008|By TED SHELSBY

Don't blame the farmer for the biggest increase in food prices in nearly 20 years.

The farmer's share of the retail food dollar is about the same today as it was in the 1970s.

Take corn, for example. According to economists at the American Farm Bureau Federation, the farmer receives less than 8 cents for the corn used in an 18-ounce box of corn flakes selling for $3.30 at the grocery store.

It is pretty much the same for a loaf of bread. The farmer receives about 16 cents from a loaf of bread that sells for $1.78.

The farmer's share of a 5-pound bag of flour costing $2.39 is $1.10.

So, what's the driving force behind rising food prices?

The rise in the price of oil - which has Maryland motorists paying more than $3.70 a gallon for regular gasoline at many stations - is a major culprit.

"Higher oil prices affect much more than just the cost of driving; they are actually one of the major factors behind higher food costs," Ed Schafer, secretary of the U.S. Department of Agriculture, said in a news conference on Monday.

"For food products, higher oil prices mean higher costs of transportation, processing, packaging and distribution, and all the other intermediary steps that bring commodities from the farm gate to the retail store," said Schafer.

He added: "Those steps account for approximately 80 cents of every retail dollar that is spent on food here in the United States."

On a much larger scale, the increased use of corn in the production of ethanol accounts for only 3 percent of the more than 40 percent increase in world food prices this year, according to Schafer.

The United States, as well as other nations around the world, is developing biofuels, including ethanol, to reduce their reliance on oil.

Their steps are already posting some results. According to the International Energy Agency, the biofuel production in the U.S. and Europe over the past three years has cut the consumption of crude oil by 1 million barrels a day. That saves more than $120 million per day, Schafer said.

In a breakdown of the consumer food dollar, Joe Glauber, the chief economist at the USDA, said 19 cents is attributed to the farm value of commodities.

He said labor accounts for 38.5 cents; advertising and packaging, 12 cents; transportation and energy, 7.5 cents; and other costs equal 23 cents.

Time for strawberries

They are an epicurean delight: plump, red, locally grown strawberries, sweet, soft and juicy. And the season to enjoy them is now.

Berries thrive in cool temperatures. Depending upon the weather, Eastern Shore strawberries usually are ready for picking by the middle of May, and the season runs until the middle of June.

Climate variations across the state result in the season starting slightly later in some locales. In Carroll and Frederick Counties, for example, the season usually runs from June 1 to July 1.

When selecting strawberries, the state Department of Agriculture suggests that consumers look for a full red color.

Strawberries do not ripen after being picked, so consumers should choose fully ripe berries. The caps should be bright green, fresh looking and fully attached.

Strawberries are a small but important part of Maryland agriculture. In 2006, the last year for which statistics are available, farmers harvested more than 400 acres of strawberries that sold for $2 million.

The bulk of the strawberries sold in supermarkets come from California, which accounts for about 80 percent of total U.S. production, and sales top $1 billion a year.

There was a time, back in the 1940s, when strawberries were a much bigger crop in Maryland. At that time, Pittsville, a small Wicomico County town about midway between Salisbury and Ocean City, was known as the "strawberry capital of the world."

Maryland strawberries are sold at farmers' markets, pick-your-own farms, farm road stands and grocery stores.

The state Department of Agriculture has prepared a directory of 86 farms across the state selling strawberries. The Web site is www.marylandsbest.net.

Md. Commodity Classic

Corn, soybean and wheat farmers should mark July 24 on their calendars. That's when the Maryland Grain Producers Association and the Maryland Soybean Board will host their annual Maryland Commodity Classic.

This year's event will be held at the Queen Anne's 4-H Park in Centreville, starting at 9 a.m.

There will be morning tours of the Wye Research and Education Center that will highlight soybean and corn checkoff-funded research projects.

A business meeting will follow lunch and the guest speaker is Mark Pearson, host of Market to Market, the PBS production covering issues from global trade conflicts to environmental controversies and changing technologies that challenge rural America.

For information about the Maryland Commodity Classic, contact the Maryland Grain Producers office at 410-956-5771.

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