Don't get caught up in food costs

Friday, May 9, 2008

A few years back I heard, and used in one of my articles, a story about a farmer who had decided to quit farming and do something else. When he was asked why he was giving up the farming career he had been involved in for so long, he said, "There are just too many 'ups' for me."

When he was challenged on his statement about too many "ups" he offered this explanation for quitting. He said, "First, you have to wake up, then you have to get up. Next you have to wash up, feed up and hitch up. Then you have to catch up and keep up. When you check up, you find you've hardly enough to pay up and that's when I gave up."

As spring arrives in the rural communities around this state, most of us find it hard to believe that anyone would want to give up a life of farming. But, if you are a farmer and read all the press lately about food costs, food shortages in the world, ethanol and other stories that seem to want to blame those who are into farming and agriculture in general, I can sort of understand how they feel.

Being one myself accused of having an agricultural bias when I write (you think), I also feel the jabs when misdirected stories about food and farming come our way.

However, we all need to understand that farming is a business just like the shops in town or the manufacturer in the industrial parks. Farmers have their ups and downs the same as any business, with the main goal being to keep the books in the black.

Farms must make a profit to survive, and with the continued movement of suburbia into the farming communities along with farm land costs going out of sight to farm, adding in energy costs and farm supply costs, profitability on the farm is not at all like what some New York City writers think it is when they hear about $6 a bushel corn.

Just the other day, in a story by Associated Press writer Mary Clare Jalonick from Washington, D.C., she mentioned the well-being of farmers.

In a story on how farm subsidies were being switched to feed the needy she said, "Suddenly, higher food prices for consumers are a more urgent political issue as the November election approaches than government payments to farmers who are doing pretty well on their own now."

That may sound good in print, but tell a farmer who is buying $4 fuel and paying fertilizer costs out the roof that he is "doing pretty good on his own" and your conversation may take a turn that is not at all pleasant.

A farmer is a consumer and just like other consumers their costs are up as well. This country has run a long time on a cheap food policy and that time may be changing in some ways. As American Farm Bureau President Bob Stallman said in a recent press conference, "Farmers are price takers and not price makers."

The return on a bushel of corn or wheat to the farmer used to be affected pretty much by what was happening down the road, the weather or out in the Midwest. Not today. We are in a world market and our problems are now place on a worldwide scale.

World food supplies can affect us all. China and India are consuming more grain and meat as incomes increase. Consumption of meat has increased demand for grains for animal feeding purposes. Per capita consumption of meat in China doubled between 1990 and 2005 and is still growing. This is leading to a rapid increase in the demand for feed.

There are weather-related production shortfalls, increased fuel costs, financial market policies making agricultural markets more transparent, plant diseases hurting harvest in countries like Vietnam reducing supply, Australia has experienced a drought since 2002 and the list could go on and on not even including factors within our own country.

Farmers receive 19 cents from every dollar consumers spend for food, according to the latest USDA Economic Research Service report. The largest single share of the food dollar, 39 cents, is for labor (assumed to be up 3.5 percent, consistent with labor cost changes for 2007 reported by Bureau of Labor and Statistics. However, the minimum wage rate rose 13 percent in 2007 and an additional 12 percent in 2008).

Energy-intensive activities such as transportation, fuels and electricity contribute a 16 percent share and "other" marketing costs account for 22 cents, and slightly less than 5 cents is for corporate profits before taxes. Thus showing that the person who plants it, feeds it, prays over it and grows it, does not control it.

Just like the farmer said, "There are just too many 'ups' for me."

Pettus L. Read is editor of the Tennessee Farm Bureau News and Director of Communications for the Tennessee Farm Bureau Federation.