SOUTHWEST IDAHO — Reports show that food prices spiked from 2010 to 2011. But don’t blame farmers, local agriculture experts say.
“We’re probably the only producer in the nation that does not set its own price,” Caldwell farmer Derek Vermeer said. He raises vegetables, grains, fruit and seed crops.
Farmers generally sell to wholesalers or food processors, not directly to grocery retailers. They can negotiate prices, but it comes down to how much the middleman is willing to pay.
“Can you pass on your costs? Well, only if the buyer is willing to pay it,” said New Plymouth farmer Mike Shoemaker, who’s been farming for 35 years and raises beef, cattle, corn and wheat. “… The buyers tell us, ‘Well if you don’t sell it to us, somebody else will.’”
In the last couple years, due to shortages caused by the drought in the Midwest, farmers have been able to sell many commodities at higher prices.
“From my perspective the prices (paid to farmers) are probably as good as I’ve ever seen in my whole life,” Shoemaker said.
“But,” he added, “the input costs are on the rise as well.”
Fuel and fertilizer costs, which Shoemaker estimates make up about 40 percent of his annual budget, have risen at unpredictable rates.
Fertilizer rates in the past, for example, would swing $40 throughout the season, Canyon County Farm Bureau Executive Director Roger Batt said. Now that jump is closer to $400.
“The rising input costs on farming operations does really hurt the bottom line,” he said.
The profitability of three major crops in Idaho — wheat, barley and corn — has been high the last four years, Idaho Farm Bureau spokesman John Thompson said.
“When grain prices are good, agriculture is going to do well in Idaho because that’s going to support everything else,” he said.
Local farmers are encouraged by the rising crop values, and morale among farmers is higher than Batt’s seen it in a long time, he said.
Consumer morale, on the other hand, is a different story. But the rising dollar amount on your grocery bill is influenced by multiple factors, most of which are out of the farmers’ control.
“Farmers can’t really pass their costs on,” Thompson said. “If you’re just selling commodities then you take what the market gives.”
INPUT COSTS RISE
From 1991 to 2011, farmers’ input costs rose 1.4 times faster than their prices received. From 2011 to 2012, farmers saw input costs increase in several areas, and the U.S. Department of Agriculture estimates the aggregate cost of farming went up 6.2 percent.
From 2011 to 2012:
6.1 percent increase in Idaho Power rates
6 percent increase in machinery costs:
1.4 percent increase in average diesel costs in Western Idaho
- 2011: $3.50/gal
- 2012: $3.55/gal
Fertilizer prices increased in Southern Idaho
- 13 percent increase for nitrogen
- 5.3 percent increase for phosphate
- 12 percent increase for potash
EXAMPLE: Potato growers
Cost to fertilize potato fields increased 11 percent in Western Idaho.
- 2011: $647/acre average
- 2012: $720/acre average
Land rent prices are up. For potato growers, the cost to lease ground in Southwest Idaho increased 7.1 percent within the last year.
FARMERS’ SHARE OF “FOOD DOLLAR”
1998: 17 percent went to farmer
2008: 15.8 percent of each dollar spent on food in the U.S. went to farmers
EATING AT HOME vs. EATING OUT
- Grocery stores: 22.7 percent of each food dollar went back to farmer
- Eating out: 8.2 percent of each food dollar went back to farmer
But the amount farmers get back from each food dollar depends on the commodity and how much added preparation and service value — such as processing or restaurant service — goes into that product. For instance, in 2011, U.S. farmers on average received:
51 percent of each consumer dollar spent on eggs
8.3 percent of dollar spent on potato chips
5 percent of dollar spent on bread.
- Grocery stores: 24.3 percent of each food dollar went back to farmer
- Eating out: 4.7 percent of each food dollar went back to farmer
- Info from University of Idaho Extension Farm Management Specialist Paul Patterson.