Food Costs

A nickel for a quart of fresh milk sure sounds good, doesn’t it? Well, it turns out that back in 1907 my great-grandmother was undercharging for her cow’s milk. It is a fact that food prices have gone up since then. What prices haven’t? But you might be surprised at how little food costs have increased compared to the overall cost of living and other items.

(Data from the Bureau of Labor Statistics.)

So… Over 100 years, the average household income went up 67 times but the average amount of money people spent on food only went up 16.4 times. In 1901, people were spending over 40% of their income on food. In 2003, only 13% of the total household income is spent on food. Wow! What a difference!

How does this break down in different food types?

(Data from the Bureau of Labor Statistics.)

So at $0.05 cents per 1/4 gallon of milk, my great-grandmother was undercharging by $0.02!

Sure, the price of everything is going up. That’s to be expected. But while the average household income went up 67 times and average overall expenses went up 53 times, the costs of food went up less than 30 times. It turns out, Americans spent 74 times more on housing, 60 times more on healthcare and insurance, and a whopping 172 times more on entertainment in 2003 than we did in 1901. And we only spent 16 times more on food in 2003 than we did in 1901. That makes the increase in our food prices not look so bad!

So how are we able to keep food prices so low, compared to the costs of everything else?

It’s thanks to our farmers.

Farmers, and people involved in all types of agri-business, are constantly improving their techniques, resulting in fewer costs required to produce even more food. I’ve already talked on this website about how farmers raise beef cows, dairy cows, pigs, and turkeys. Everything livestock farmers do is to find the ways to best take care of their animals – happy animals eat better, grow better, put on more muscle, make more milk, and lay more eggs.

Farmers who raise grains, fruits, and vegetables are doing the same things. They are always looking for new hybrids of plants that can utilize nutrients better, fight off pests better, and withstand changing environmental conditions (like drought, freezing, or high winds) better. This lets the farmer grow as much (or more) food while using less fertilizer, pesticides, or herbicides.

But it isn’t the farmer who sets the price of food. In fact, according to the United States Department of Agriculture Economic Research Service, in 2011 US farmers only saw 15.5 cents of every dollar spent on food. So if you spend $1000 on food for your family one month, the farmer sees $155. He needs to feed his own family, pay his bills, pay his employees (if he has any), pay the veterinary bills for his livestock, pay for equipment maintenance and maybe a new piece of equipment, and purchase supplies for his farm including seeds for next year or feed for his animals. That 15.5 cents isn’t guaranteed, and it changes from year to year. The weather is also different every year, which means the amount of crops farmers can harvest are different every year, which means the cost of food for livestock is different every year.

With so many variables that go into farming, aren’t you glad that you can go to your grocery store and spend just 13% of your income on food for your family?

Other posts in this series:

• Milk from our backyard
• Food safety and milk
• Dairy farm sizes
• The cost of food

{This post was sponsored by Indiana’s Family of Farmers. All thoughts and opinions are my own.}