Food dollar math

For those of us who value healthy, organic farmland and the wholesome food it produces, here’s a troubling set of statistics: Our regional farmers’ gross revenues are between 4¢ and 7¢ per square foot according to the 2012 U.S. Department of Agriculture (USDA) Agricultural Census. Farm acreage prices in Washington have increased by nearly 50 percent in the last four years, according to PCC Farmland Trust. Nationally, the American Farmland Trust says we lose 50 acres of farm and ranch land to development per hour.

The reasons? Despite agricultural lands being intrinsically valuable for our health and well-being — we all eat — the economic value of land that grows food cannot begin to compete with development. It’s not just land development but also our food purchases that impact farmland loss. According to the 2014 USDA Food Dollar Series, only 3.5¢ for every dollar spent goes back to the farmer when eating out, whether at a restaurant or fast food joint. The same study says farmers are compensated 16¢ of every dollar spent on foods prepared at home.

Organic farms typically are more profitable than nonorganic farms (see sidebar), so choosing organic — whether at grocery stores or when eating out — is a good way to make sure your favorite organic farmers can thrive.

At-home food dollar

For the average American, 24¢ of the “at-home food dollar” is spent on food processing — the creation of foods such as bread, noodles, yogurt, cheese and crackers from raw materials. Processed foods are found in the middle aisles, the freezer section or the deli, and in cans, boxes, bags and jars. Processing includes cleaning and prepping produce for sale. The cost of packaging processed food is miniscule at only 3¢ of the at-home food dollar. Just 16¢ of every food dollar goes to pay the farmer to get food out of the ground.

“A farmer earning 3.5¢ on the eating-out food dollar or 16¢ on the at-home food dollar cannot begin to earn enough money to compete with developers.”

Getting the processed food to market is the bulk of the costs for the at-home food dollar. Truckers transport food across the county or the country; wholesalers buy raw and prepared foods to sell to retailers; grocers purchase, stock and sell food; and baggers pack bags. All of these trades add incremental costs to food, so almost half of the at-home food dollar — 42¢ — is spent on getting food from the distributor to the grocery store and eventually Americans’ shopping bags.

Despite the lower returns, selling directly to a processor or wholesaler is highly beneficial for farmers because they get to do what they know best — grow food and access larger markets and more customers.

The remaining 15¢ of the at-home food dollar is spent on all the ancillary services to the food industry including advertising, legal services, accounting, financing, insurance and energy. Despite being inundated as consumers with food advertising on television, websites, billboards and buses, one would expect advertising would be a much larger slice of the at-home food dollar. But in reality, it’s just a few cents. To put that figure in a broader context: the value of the U.S. food industry is $835 billion, according to USDA, and the advertising slice is only about $21 billion.

Eating-out food dollar

Eating food away from home, especially in mainstream, large-scale restaurants, supports farmers even less than preparing food at home, according to the Food Dollar Series. With almost three-quarters of every “eating-out food dollar” spent on food service, there’s not much left for anybody else including farmers. Restaurants, bars, clubs and fast food joints where we buy prepared foods eat up 72¢ of the eating-out food dollar. Food processing, packaging, wholesaling, energy, financing, insurance, advertising, agribusiness, legal and accounting are all a nickel or less of the eating-out food dollar. Farmers get a mere 3.5¢ back for every dollar spent eating out. That’s not much.

When eating out, directly supporting farmers is possible. Some smaller, local Seattle restaurants, such as Portage Bay Cafe and Maria Hines’ certified organic restaurants, feature food from local farms and producers, ensuring more money goes back to the farmer.

More money to farmers

Making money as a farmer is tough. A farmer earning 3.5¢ on the eating-out food dollar or 16¢ on the at-home food dollar cannot begin to earn enough money to compete with developers looking for a place to put new homes. With the average age of farmers at 59 years-old and nearing retirement, it makes farmland even more vulnerable to being sold for houses.

Shopping at PCC Natural Markets is one way to support local growers. Organically Grown Company (OGC) is one of PCC’s major distributors in part because of its commitment to organic farmers. Similar to the Community Supported Agriculture model where a customer pays for food at the start of the growing season, OGC also provides farmers with monetary advances when necessary. This enables farmers to cover the springtime costs of seed, fertilizers and other inputs. OGC also provides transparent pricing information to farmers, allowing them to know the price OGC gets for selling the farmers’ produce.

Making conscientious decisions about where we buy and eat food is important to support our local farmers and ensure they’re getting a fair portion of every food dollar we spend.

Kathryn Gardow, P.E., is a local food advocate, land-use expert and owner of MetroAG Strategies, an organization dedicated to providing multidisciplinary solutions to building sustainable communities. She’s on the Urban Land Institute–Northwest District Council’s Center for Sustainable Leadership planning team. Follow her blog: gardowconsulting.com/blog.