Friday, August 26, 2011

Detective Work: Following the Money in the Consumer Food Dollar

In 1911, a bushel of wheat cost $1.
Today, that $1 is worth $23.82.
Today, a bushel of wheat costs $9.28.

Is there a problem? Yield has gone up, so farmers get more bushels per acre than in 1911. And farmers own more acres than in 1911 - average farm size grew from 297 acres to 1450 acres.

So how is it that Canadian farm net income from the market was near zero, and often negative over the past couple of decades?

Here's a clue: only 5 % of the consumer dollar goes back to the grain farmer. "Using his farm in East Selkirk, Man., as an example, [KAP president] Chorney said he would receive $90,000 if he grew 300 acres of wheat that yielded 50 bushels per acre. However, the bread, cereals and other products from his wheat would generate $1.8 million in sales for grocery stores."

Where does that 95% go? Transportation, packaging, advertising, retail and storage costs like rent and business taxes, fuels and electricity, and labour.

Oh, and profit for global agribusinesses. Remember the food crisis in 2008 that saw food riots in many countries? The Wall Street Journal reported that in the midst of the crisis, "grain-processing giant Archer-Daniels-Midland Co. said its fiscal third-quarter profits jumped 42%...Monsanto saw its profit in the latest quarter more than double...Cargill Inc.'s profits jumped 86% to $1 billion in the latest quarter...Bunge Ltd.'s earnings rose about 20-fold to $289 million."


  1. Disgusting. I am not well educated enough in this arena to understand how this links into government subsidies (at least in the US) that encourage over-production, driving prices down and damaging overseas markets, but it all seems terrifying and backward and a great argument for corporations to continue to use their clout to protect the "free market."

  2. You're describing the phenomenon of "dumping". Killed the milk sector in Jamaica, rice production in Haiti, helped kill corn production in Mexico. We don't have subsidies in Canada anywhere near the extent you do in the US, but whenever farmers make more money anywhere, it seems that the agrichemical companies and transportation behemoths etc. just raise the cost of their goods and services in lockstep.

  3. Not to mention cotton in West Africa. What's amazing to me now is the extent to which Monsanto and the like have been implicated in "development," attempting to convince African and other farmers that GM crop seeds are somehow better, when they eliminate the "knowledge" built up in local seed stocks and terminate themselves at the end of harvest.

  4. Bill and Melinda Gates have been pushing GMOs with their "New Green Revolution for Africa". Lots of wealth behind the push, for sure. I suppose it could be seen as hopeful that they feel the need to disguise their efforts as development... then again, colonization efforts were improving the savages...