The Recovering Farmer

Friday, October 15, 2010

The Farmer’s Share

Okay, I am back on a subject that has been a sore point with me ever since I became involved in agricultural “politics”. I had a reminder of this as I was enjoying my morning coffee on Monday. As per usual, although a tad later than normal, after all it was Thanksgiving, I watched news on CTV. Story that caught my interest mentioned increased meat prices to consumers for next year. Why? Because there has been a significant decrease in livestock inventories. Although the newscaster did not mention the reason for the decrease I knew what the reason was. Livestock producers have been losing gobs of money for years. Simple economics dictates that inventories will drop. The business reporter went on to say, rather shyly that “we kinda need farmers”. No $%@#%*% kidding we “kinda” need farmers. Do they need a reminder, AGAIN, that “farming feeds us all”?

Then again, as per usual, I switched to some American news. Guess what. Same story. Meat prices expected to rise. Of course, the second part to the story was the fact that there have also been significant increases in feed prices. Corn futures higher than they have been in over two years. So, what does this mean for farmers? Good question. Noticed hog prices dropped significantly over the last two weeks. Wait a minute. I thought there was a decrease in livestock inventories. Simple economics dictates that a decrease in animal numbers should mean an increase in prices. Apparently not.

So, really, the reason for my rant is wondering how much of the increase in meat prices will actually make it back to the farm gate. I recall seeing graphs showing a gradual decrease in the farmer’s share of the consumer dollar. Retailers have all kinds of justifications for the share they take. Where does that leave farmers? Keystone Agricultural Producers did a survey, earlier this year, showing that the farmer’s share of the consumer dollar had actually increased marginally. If memory serves me right it was somewhere around 1%. Me thinks that is not enough to keep farmers farming. So, decrease in inventory, increase in feed prices and higher meat prices. Again, any increase in price to farmers will be needed to cover higher input costs. Sound familiar?

Sorry for the rant. I think I feel better. Make it a good one.

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