11/12/2010 06:13 pm ET | Updated May 25, 2011

Who Do You Really Pay for Your Food?

The USDA tracks the value of domestic food expenditures, and also reports what portion of the consumer dollar goes toward labor, packaging, intercity transportation, fuel, pre-tax corporate profits, and farmers. The difference between what the consumer pays and what the farmer gets is called the marketing bill. The marketing bill, which "covers processing, wholesaling, transportation, retailing costs, and profits," or any function beyond the farm but before the household, has been climbing upward since the start of the dataset, in 1967, which means the farmers' share has been on the decline.

The components of the marketing bill show that, from 1970 to 2006, labor, packaging, fuel, corporate profit, and miscellaneous items (like advertising and promotion, local for-hire transportation, and rent) increased relative to consumer spending, while fuel costs fell slightly relative to spending. The portion of a consumer dollar that a farmer receives fell the most dramatically in relation to consumer spending on food: in 1970, a farmer captured 32.10% of the consumer dollar; in 2006, she got just 18.53%.

These trends show that over the last 40 years, getting food to market has become relatively more expensive, while the share that the farmer earns for producing the agricultural components of food has dropped off. It is worthwhile to note that the farmers' share of the dollar begins to decrease significantly in the 1980s, right around the time that alternative market channels like farmers' markets and Community Supported Agriculture (CSA) started gaining popularity. Is it any surprise that farmers would seek the closer connection to consumers that these other economic models afford in a world in which almost all of the functions involved in connecting consumers with their food got a raise, while farmers who actually produced the food got, in essence, wage cuts?

Some would say that the functions involved in the food supply chain beyond food production add significant value -- the aggregation of supply, the processing, the wholesaling, the marketing, the advertising, the research and development, the store shelves and employees. But perhaps we're moving beyond the need for those functions as a costly component of our food. The internet levels, liberates, and democratizes industries and supply chains. We should unleash it for the benefit of our farmers and our eaters, instead of continuing to pay for "value" that I, frankly, have a hard time valuing.

Crossposted at