Thursday, February 21, 2008

Paying Your 2008 Food Bill

According to an article I read in the February 13, 2008 issue of the "Iowa Farm Bureau Spokesman" if you are an average American you have already earned enough money by the beginning of February to pay for all your food for the entire year. According to the statistics you spend around 9.9% of your disposable income on food. As I read through the article I had a couple of thoughts ... The first thing that popped into my mind was, "wow, that is nice that we are such an affluent country that we can do this so quickly". Then I thought, "hmmm, is this something to be proud of?"

Let me through out a few more statistics from the article. It says, "consumers have to work 52 days a year to pay for health care, 62 days a year to pay for housing costs and 77 days a year to pay their federal income taxes." But, they only need to work about 35 days to feed their family for the year. The conclusion of the Farm Bureau is that this is a good thing and only proves how great American farmers are at being efficient in raising livestock and growing grain.

The first question that pops into my head is this ... How many days from those 77 days it takes to pay our taxes are needed to subsidize the farming and food industry? I think we need to factor that in if we are going to get a true representation. Here is another question ... How much of the food produced in this country is consumed by this country, and how much do we import? I truly don't know the answer to that one, but would be interested in hearing if anyone knows.

On the surface this seems so great. Our food is cheap and thus we have more money to spend on other junk! But, is cheap affordable preservative and hormone packed food a good thing? Would be be better off as a country if it took say 15% or 20% of our disposable income to feed our family for the year? Would they be getting higher quality food and then in turn be more healthy?

This is what Iowa Farm Bureau President Craig Lang has to say, "They also need to know that a $4 box of corn flakes has a nickel's worth of corn. But a lot of work goes into making that nickel's worth, and Iowa farmers are proud to be responsible growers and do their part in feeding the nation and a growing world population." So, CORN flakes only take a nickel's worth of CORN? It's going to take a lot of corn flakes to sustain farming families across the country!

I'll end with this. According to the statistics in the article, "of every dollar spent for your food item at the grocery store, 38 cents is for labor; 24 cents is for packaging, transportation and advertising; and 19 cents is was spent by the farmer on input costs". That totals up to 81 cents of which only 19 cents are left for profit. That profit needs to be divided by the grocery store, the food manufacturer, and then the farmer. How much do you think your farm neighbor receives in the deal? And we are proud of this...

What would the US be like if a large portion of the population began purchasing their food directly from the farmer ... cutting out the middlemen and getting a higher quality product ...


Yeoman said...

You raise a very interesting, and very broad topic (indeed, recently, each one of these excellent topics could be the source of a small book).

I don't know the answer to your direct question, but in terms of the actual cost of food, I wonder if statisticians have a real grasp of it.

The US has a "cheap food" policy and has for years. It's such a matter of general acceptance, that only rarely does either one of the political parties dare mess with it much. Last time anyone did, it was very briefly, and that was in regards to The Freedom To Farm Act, and it's quick disappearance in practical terms.

Farm programs tend to drive food prices down, and encourage the system we presently have. Ironically, that system is often detrimental to small farmers, but a real byproduct of it is that American food prices are low. It's one of several areas of the economy where the US does not have a truly free market system, but only a partially free market system. It's also an area where huge systems, indeed monopolies are, openly tolerated and even encouraged.

Whatever the benefits to the consumer might be, it means that small farmers have a very hard time making a living.

If this system was eliminated, food prices would rise, but then so would direct income to farmers. Overall, that'd be a good thing. Consumers, of course, would regard that as a bad thing, but I think that perhaps it might encourage people to focus more on "real" food, as opposed to the synthetic food so many seem to enjoy. A more stable agricultural base would be to everyone's benefits.

And, in the end, I suspect the overall costs to everyone do not change on a society wide basis, as the hidden costs would be less present.

Mellifera said...

It's true, urban societies and the government that lives on taxing them depend on cheap food. There's no other way to sustain an urban workforce than to drive down the price of food.

So at first while I would have thought of cheap-food policies as a "bread and circuses" political strategy, which they certainly are, but there's also something beyond that (or "more sinister" if you prefer : ). Farms don't pay much taxes, but businesses (more or less an urban phenomenon) do. Businesses thrive on cheap labor. Cheap labor needs cheap food. Shazam! The Farm Bill.

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