Tuesday, March 8, 2011

Rising Food Costs

While at the Commodity Classic an article came out in the Tampa Tribune about the rising costs of food prices on March 5th. The article was in the business section and had two great pictures. The first was a farmer from Montana talking to a John Deere representative with a combine in the background. The second picture was USDA Secretary Tom Vilsack. The sub headline was "Average food bill could increase by $20 a month."

Into the article starting at the fourth paragraph it stated "Companies like Sara Lee and McDonald's have warned they could raise prices this year due to higher commodity costs. And some economists are warning that higher prices could add more than $20 to the average monthly food bill for a family of four."

The next paragraph reads "At the farm level, prices have nearly doubled in recent years according to USDA figures." Has the mental picture been painted yet? All of the statements are pointing to the rich farmer raking in the dough.

The article goes on highlighting the different commodities and their increase in prices like soybeans rising from $6.43 in 2006 to $11.70 at the end of last year (an increase of 45%). Wheat prices increased from $4.26 to $5.70 (25% increase) since 2006, and corn prices went up from $2 to $5.66 since 2005 (a 65% increase).

Now to the headline: "Energy costs cited as food prices rise." Energy costs? Who would have thought that. The first paragraph reads "An Iowa farmer for 44 years, Daryl Haack offers one way to help explain why food prices are rising so much lately: Look at your local gas prices."

The second paragraph reads: "There's only about six cents worth of corn in that $3.50 box of cereal," Haack said. "But there's energy and fuel used before and during every step on the way from my farm to that grocery shelf."

Despite the headline citing energy costs as being the culprit for higher food costs, the Tampa Bay Tribune took the article to the farm. They wanted to show that farmers are the ones that are making all of the money instead of the actual cause.

I don't raise corn or soybeans due to my climate and hills that make me rely on a leveling combine. I would get the combine stuck or slide into the Clearwater River 1,500 feet below trying to get them harvested. But I do raise wheat.

According to the Wheat Foods Council a bushel of wheat (60 pounds) can make 90 one pound loaves of whole wheat bread. WOW! But using the wheat prices previously stated in 2006 a loaf had $.05 worth of wheat and in December 2009 the same loaf had $.06 worth of wheat. The difference of a penney!

The Wheat Foods Council also shows that one bushel of wheat makes approximately 42 pounds of flour. In 2006 that flour would have had $.10 worth of wheat and last year $.14 worth. I don't see anywhere a doubling of prices, do you?

These are the kinds of tactics that agriculture runs into every day. The media and activists use all kinds of mistruths to make their point instead of looking at the real issues. Why do they want to keep attacking small family businesses?

That's right, small family businesses. That's what each farmer is. Searching the internet for small business definitions I tried the SBA website and gave up after five minutes of looking (that’s government efficiency for you.)

However I did find two alternative definitions on Wikipedia. The first stated that a small business employs less than 100 people. The second definition stated “For SEC purposes, small businesses are defined as domestic companies with revenues of under $25 million, and not investment companies. Subsidiaries of larger companies do not qualify as small businesses.” That one is directly from the SEC.

I don’t know about you, but I am definitely a small business. I work on my farm with my wife and a hired man. At times I might have an extra person helping along with the boys. And I am definitely not even close to $25 million in revenues. And guess what, 90% of the farmers in the United States would be in that category.

If the media and activists are upset about “Big Businesses” and “Big Oil” why are they picking on small businesses and family farms? Are you ready for my conspiracy theory? It is for control of land and water!

The control of land and water has been battled over since the Garden of Eden. Wild animals fight over it, individuals have fought over it, and countries have fought over it. And there are people that are upset because a minority of the population loves and cares for it every day.

The article did write “Farmers, meanwhile, say they’re not rolling in profits, as costs for their fuel and supplies are surging just as quickly.”

“Whoever thought Egypt would blow up like it has,” said Erik Younggren, a fourth-generation wheat farmer in Northwest Minnesota, and vice president of the National Association of Wheat Growers who came to Tampa for the trade show. He has to buy fuel up front, he said, before knowing what price he’ll get for wheat in a year during harvest time. “I get up every day and check the news in Libya now.”

I know Erik and he did not come down for the trade show. He came down for the NAWG annual meeting and the tradeshow is visited during a break in meetings. Even in quoting a person, the media has an agenda. Not once did the Tampa Tribune cite the crisis in the Middle East or energy as the cause for food prices to rise, that was farmers. You mean to tell me that hicks understand more about what is happening in our country than our sophisticated city cousins?

Farmers pay the transportation costs both ways. I also have to pay for my wheat to get it out of the field and all the way to Portland, Oregon where it is then shipped around the world. One might wonder how much energy is used after the wheat leaves the field? But no, those with agendas don’t want to get at the heart of the problem, it might lead to the public demanding drilling for oil or calling for nuclear and hydro energy sources to help solve the problem in the United States. And for them that would be unpopular.


  1. Great post. I am on a Chevy pickup forum, and we just had this same discussion there as people there were blaming ethanol for all of our problems. I let them into my world a bit, showing them the costs that we incur raising corn. When we don't raise enough corn, food and fuel prices are our fault, and when we raise too much, it's our fault that we have surplus and that we export too much. I'm not familiar with raising wheat, but I know your equipment and fuel costs are through the roof, just like ours. Really, it's pretty simple. What's used to raise crops? Diesel. What's used to haul crops? Diesel. What's used to haul food to grocery stores? Diesel. Red diesel was $3.17/gallon here last week. $4 corn won't break even anymore. It's a little scary out here in farm world if you don't have moldy family money sitting in a bank somewhere. Most consumers are too far removed from the farm to understand, and most don't care, either.

  2. You aren't even considering the fact that many fertilizers are petroleum based. The chemicals used to produce a healthy, pest free, desiese free product are usually petroleum based. Then the farmers power bills are hiked as much as 15% higher than the average household pays. Farmers invest their entire lives and every penny they have..to feed the world. If we don't do it, you all starve!

  3. Mama Bair I really appreciate your comments. Unfortunately due to self imposed time and size constraints I sometimes cannot put everything into the blog that could be there. However, those costs are on the farmers side of things and do not directly effect the prices in the store, but they do effect a farmers bottom line. The main point of the article was to point out that farmers and the price of their crops are not the culprit for rising food prices, but energy costs are. Thank you for you comments and I hope you will leave more.