From Farm to Retail: A Price Review

by Patrick Kirchhofer, Peoria County Farm Bureau

As of early October, the harvest was in full swing in the Peoria area. Temperatures had fallen to feel more like the expected seasonal weather, and the rains had slowed down to allow farmers to reap what they had sown last spring.

Overall, yields have been very good on both corn and soybeans. Many fields will average over 200 bushels an acre on corn and 60 bushels an acre on soybeans. If these yields hold true, this will be well above the 10-year average. This winter, the U.S. Department of Agriculture’s National Agriculture Statistics Service (USDA-NASS) will release the average yields for each of Illinois’ 102 counties. The average yields released last winter for the 2015 crop were 185.9 bushels per acre on corn and 60.7 bushels per acre for soybeans in Peoria County. Tazewell and Woodford counties yielded 182.5 and 201 on corn, and 60.4 and 63.4 for soybeans, respectively.

Mark Schleusener is the Illinois State Statistician at USDA-NASS, and his office compiles the yield averages for each county. He is scheduled to attend a meeting at the Peoria County Farm Bureau building on January 25, 2017, to explain his role in putting together these estimates, as well as weekly crop progress reports and the Illinois Annual Bulletin. In addition, another speaker will discuss crop insurance during the same program.

How does a big harvest of farm commodities affect food prices and your grocery bill as a consumer? This year’s Fall Harvest Marketbasket Survey, conducted by the American Farm Bureau Federation (AFBF), revealed the total cost of 16 food items used to prepare a family meal was $49.70—down $4.40 or eight percent compared to the survey conducted a year ago. Of the 16 grocery items surveyed, 13 decreased and three increased in average price. Lower retail prices were noted for several items, including eggs, whole milk, cheddar cheese, chicken breast, sirloin tip roast and ground chuck.

Egg prices dropped significantly, primarily due to production recovering from an avian influenza in 2014. Milk prices were also down substantially from prior years—particularly compared to record highs in 2014—due to global dairy surpluses. In general, for all commodities in agriculture, there is a surplus of product on hand and prices are depressed.

The three items showing a moderate retail price increase compared to a year ago include bagged salad, which is up 16 percent; apples, up by 10 percent; and potatoes, up by three percent. According to John Newton, AFBF Director of Market Intelligence, dry conditions in the Northeast and Northwest the last few years likely contributed to lower supplies and higher retail prices for apples, while salad prices are up due to lower output in the West, particularly in California and Arizona.

If consumers are paying $49.70 for these 16 grocery items, what is the farmers’ share? According to the survey, it would be approximately $8.45 of that $49.70 total. Through the 1970s, farmers received an average of 33 percent of consumer retail food expenditures for food eaten at home and away from home. Since then, that figure has steadily decreased to an estimated 17 percent.

There are many pros and cons to the pricing scenarios mentioned above. Large yields are good for farmers, as they have more bushels to sell, but on the negative side, large yields usually mean lower prices for farmers. As a consumer, you should benefit from large yields as food prices should come down.

Each year, the Peoria County Farm Bureau sponsors a Farmers Share of the Food Dollar Breakfast, which illustrates the current farm prices in relation to retail food prices. The next breakfast is scheduled for March 11, 2017, at Expo Gardens in Peoria. Last year's price was 80 cents for two pancakes, two eggs, two sausage patties, a glass of orange juice and a glass of milk—mark your calendar! iBi

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