Have you noticed food prices rising over the past years? Do you wonder why that is and who gets all that money that you spend at the grocery store?
In the United States, we are lucky enough to only have to spend about 10 percent of our income on food whereas the rest of the world spends on average 18-25 percent (U.N. Food and Agriculture Organization).
According to the federal government there are many factors that cause the prices at the grocery store to rise. Some of those being extreme weather conditions, gas prices, the value of the dollar and the costs of production. As you can see in the chart below, the retail food prices have remained relatively the same over the past 40 years while the field crop prices have gone up and down drastically over the past 40 years.
In the infographic below, it shows that a farmer only makes 11.6 cents on every dollar of food sold in the U.S. The majority of money spent on food goes to food processing (18.6 cents), packaging (4 cents), transportation (3.5 cents), retail trade (13.6 cents), food services (33.7 cents), energy (6.8 cents), finance and insurance (4.4 cents) and other (3.8 cents).
The amount that a farmer earns per dollar spent on food has gone down drastically over the past six decades. In the 1950s, farmer received more than 40 cents per dollar and today they receive less than 12 cents.
So, when your buying groceries and you’re wondering why the prices go up and down, think about what all goes into getting that food from the farm to your grocery cart!
“The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.” –President John F. Kennedy