October 11, 2009
Decline in grocery food prices stretches to farmers' profits
by PHILIP BRASHER & DAN PILLER
Des Moines Register
Prices in the grocery store are down by 10 percent from last year, the Iowa Farm Bureau reports.
So are farmers' profits.The Farm Bureau's survey of food prices shows the fourth consecutive quarterly decline from 2008, when corn and soybean prices hit record levels and food processing companies and supermarket chains were warning of spikes in food prices.
Instead, commodity prices have come down. Prices for corn, soybeans and livestock are slightly more than half of what they were 12 months ago.
Not surprisingly, it's the farmers who now feel the squeeze."While the decline in global demand has helped bring prices down for shoppers, a combination of decreased demand and other factors has made things more difficult for farmers, particularly those who raise livestock," said Dave Miller, director of research and commodity services for the Iowa Farm Bureau.
"Despite the tremendous efficiency of the American farmer, the profit margins in farming are narrow, and there is a relentless cost-price squeeze. Narrow margins and high efficiency are reflected in the farmer's small share of the food dollar, 19 cents.
"American farmers are doing their part in keeping food affordable for consumers. But those tight margins also mean that farmers and their families are more susceptible to downturns in demand, like we've seen as a result of the weak economy."
Hog and cattle raisers have been losing money for as long as two years. Iowa State University warned that corn and soybean farmers may face losses at current crop prices. Link
It’s been a tough year for many people in agriculture. Whether you raise livestock or crops, the challenges of making ends meet has been particularly tough. With food shortages becoming a major challenge later in this century it’s hard to believe that prices can be so low right now. But one of the opportunities this brings to agriculture is that it gives us a chance and even more reason to educate consumers that family farm are still the ones growing their food in this country.