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Farmers not getting rich on high food pricesBy Miles Dabovich CEA-Ag Wichita County OK, I know that I'm suppose to submit educational articles for everyone to learn something from but I have bit my tongue long enough and today I want to talk about all the complaining about the price of food. For the past few weeks the media has been eaten up with the topic. And yes I do realize that the price of food is going up "some" but I'm here to defend the farmer and want to make clear to everyone that they are not getting rich nor are they responsible for the rising cost of food. Let's take for instance the cost of a loaf of bread since we primarily grow wheat in this area and as we all know (I hope) it takes wheat to make flour to make bread. Wheat however is not the most expensive component of bread. In the early 1970's which was considered the hey day producers received 25 cents of every dollar spent on cereal and baking products and that was considered a lot. By 1977 however the farmers share was down to around 12 cents. And that share until last year steadily declined. In 2005 farmers pocketed just six cents of every American dollar spent on cereal and baking products. Most food costs are now rising again. The US Department of Agriculture forecasts prices will rise 3.5 to 4.5 percent this year after a four percent increase in 2007. (A four percent increase as compared to a much larger increase for the gas we put in vehicles). But prices for cereals and bakery products could climb as much as 7 percent in 2008. So if a loaf of bread cost $2.50 that would be an increase of about 18 cents a loaf. But as I said before farmer's aren't responsible for the increase. The market with assistance from the weather, is what seems to be throwing gas on today's demand led markets. Australia's poor crops in 2006 and 2007 for instance illustrate how even small changes in supply can ignite global commodity markets. Ending world wheat stocks for 2006 and 2007 showed a 25% drop in supply which tripled wheat prices in a matter of 19 months. Like the weather, government policies are equally effective on the market force. Before ethanol became a government mandate corn was about 2.70 bushel. Today corn futures are flirting with the 6.00 mark. Let's not forget about record fuel prices and transportation cost and all the other things that contribute to the cost increase of food. Let's also not forget about the cost of producing food. Again with record fuel prices, fertilizer prices which is driven by petroleum prices as well as chemicals, producers net profits are not any larger than they were when wheat sold for $3.00. So the next time your on your way to the grocery store stop off and get some $3.50 gas and make sure to remember that the markets, the weather, the government and the economy in general are the big pushers in food prices and not the farmers. And remember to use your manners and not complain with your mouth full. We enjoy the cheapest and safety food in the world and I'm willing to pay an extra 18 cents for a loaf of bread. 5/19/08 Date: 5/13/08 Advertisement
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