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Food prices are up - but what’s to blame?

by Patricia Grotenhuis, lifelong farmer and agricultural advocate

Food prices are drawing a lot of media attention lately. It seems everything is increasing in price, both at grocery stores and at restaurants. Many different factors have been blamed for these price increases, but regardless of the reason, the outcome is the same. In some cases, food prices rise at the store without any increase for the farmer.

A Manitoba study showed the cost of a week’s worth of groceries for a family of four rose by $6.01 from 2008 to 2009, but farmers received $0.86 less. In 2009, beef farmers received $2.05 for the 600 grams of sirloin tip beef that cost you $9.15 in the store. In 2008, by comparison, the farmer also received $2.05 for the same cut of beef, but you only paid $4.61.

For more statistics about how much farmers take home from the food you buy, visit http://www.ofac.org/pdf/Dirt%20-%20final.pdf or www.kap.mb.ca/KAP%20Release%20Farmers%27%20Share%2009.pdf In North America, we have become accustomed to the low food prices we have had for the past several decades.

In Canada, we mark Food Freedom Day in early February. This is the calendar date when the average Canadian has already earned enough income to pay his or her individual grocery bill for the whole year. Canadians enjoy one of the lowest-cost “food baskets” in the world. As a comparison, Food Freedom Day in Iceland is in late February while in Mexico, it doesn’t come until early March.

Operating expenses are continuing to climb rapidly on Canadian farms. Look at the extra fees you’re incurring right now because of the higher fuel costs. Now imagine how much more it will cost to fill up the fuel tank for a tractor. Tractors are a necessity on today’s farms. They are used to bring feed and bedding to the animals, clean manure out of the pens, and also to do field work.

Electricity to run farm buildings and equipment is also on the rise with many farmers facing hydro increases due to Time-of-Use pricing. While some of us can choose to do laundry or run the dishwasher at different times of the day to take advantage of lower hydro rates, farmers don’t have a choice – animals need to be milked and fed at very specific times of the day – and these rarely match with lower hydro prices.

And although farmers are the original environmentalists, it isn’t always feasible to implement expensive green energy technology such as biodigesters on individual farms. Think, too, that crops are also selling for more money than they have lately. This means feed for the animals is more expensive.

Obviously each farm has different methods to try and remain profitable, and the answer to that productivity question is different from one farmer to the next. The fact remains, though, that although farmers may appear to be making more from sales of crops and livestock, they have a large number of new and higher expenses which those profits have to cover.

In 2009, for every dollar earned in gross sales, Canadian farmers paid out about 92 cents in operating expenses. As the price of fuel and other essentials outpace income earned, farmers must become ever more productive and efficient to stay in business. All of us, farmers and consumers alike, are going to be forced to look at our spending habits and decide what is really important as the food prices continue to rise.

I, for one, will not be blaming the farmer as food prices increase, but instead will be cutting back on other areas of spending as a way of making up the difference.

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Posted by OFAC on April 19th, 2011 :: Filed under Economics,Farm life,Feeding the world,Misconceptions,Sustainability,Sustainability of the family farm
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