The High Cost of Farming: Why Rising Store Prices Don’t Translate to More Profit for Farmers

Food prices are up almost 10% from a year ago. A pound of butter last year cost $3.77. Today that same pound of butter is $4.87. When you can find a dozen eggs this year, they cost $4.87, and last year, around $2.00. We could go on and on with comparisons, but I don’t think anyone thinks food prices have declined over the previous year or will start to decline anytime soon. However, U.S. farmers and ranchers are facing tough challenges. The USDA’s most recent farm sector income forecast expects a decrease of almost 16% in net farm income in 2023.

With food prices increasing, why don’t farmers see big profits – It’s easy to think that high grocery store prices equal higher income for farmers. However, farming is a risky business where you take the price you are given. Controlling costs is one of the main variables you control. This is why technology for ag irrigation is gaining popularity. Reduced water use means less cost of water, energy, and labor. Control what you can, but many farmers can’t control costs like fuel, labor, fertilizer, seed, heating, etc. So they are getting hit with all the increases and not seeing the profits from higher food prices.

Who is making money – Food companies, particularly packaged food manufacturers,  are doing well. For example, General Mills experienced a 97% profit increase during Q4 of last year. Other food companies are doing even better. Food companies are passing pricing increases to consumers, and consumers are paying up. Today there is a good story about the pandemic, supply chain issues, and war causing the price increases. Consumers believe the story and are willing to pay.

Why do we care if farmers are profitable – We should care if farmers and ranchers make a profit because they produce the food we rely on daily. If they struggle to make ends meet, the country can suffer because of the impact on our food supply. Every day we enjoy

A plentiful supply of endless choices at the grocery store. Being a foodie is a thing. Many Americans view food from a quality standpoint, not just a meal for energy. We are very fortunate to have so much food.

In addition, farms and ranches, especially in rural areas, are the primary source of employment and economic activity. As a result, issues on farms make an impact on entire communities. When farmers and ranchers profit, our food supply, economy, and health all benefit.

April is “Thank a Farmer Month” in many countries worldwide. It’s a chance to recognize the contributions of farmers and ranchers and support the sustainability of agriculture for future generations.


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