Rural America Supplementing the Urbanites

Recent studies clearly show that cheap food prices supplement the urban areas. This means as urban dwellers continue to have a higher standard of living than we supplement their income by providing the urban dwellers cheap food.

President Obama claims that we are no longer an agrarian society; therefore, we can send out children to school year around.

We need to be creative in rural America and create jobs not build empty houses. Creating jobs is necessary for a healthy rural America. Remember in the 60's many a farm family had their jobs in the small town and farmed.

Here is a recent article published by the Dept of Agriculture:

(SALEM) - The U.S. consumer is spending a bit more of their disposable income to purchase food than the previous year but they still enjoy the cheapest, most abundant supply in the world, according to new statistics released by the U.S. Department of Agriculture.

"It's no secret that Americans continue to get a bargain with their food dollar," says Katy Coba, director of the Oregon Department of Agriculture. "We should all thank our productive and efficient farmers and ranchers for making that bargain possible."

USDA's Economic Research Service (ERS) has recently released food expenditure statistics for 2005. They show that Americans are spending, on average, 9.9 percent of their disposable income on food.

That's up slightly from 9.7 percent in 2004 but very consistent with figures over the past five years. The percentage dropped to single digits for the first time in recorded U.S. history in 2000.

Twenty years ago, American consumers spent 11.7 percent of their disposable income on food. Thirty years ago, that figure was 15.1 percent. Going back in history, Americans spent about 20 percent of their income on food about the time today's baby boomers were born. In 1933, the figure was more than 25 percent.

Statistics are not available for individual states, but Oregon generally follows the national trend.

In terms of dollars, U.S. families and individuals spent more than $895 billion on food in 2005 compared to just $11 billion in 1933. Of course, the nation's population has risen dramatically. But the end result of increased productivity in agriculture is a percentage of income for food that is the envy of the world.

"Better equipment, mechanization, use of hybrid seeds, fertilizer, and crop protectant chemicals have all contributed to increased production in the U.S., which has lowered the cost of food to the public," says Brent Searle, ODA analyst and special assistant to the director.

"That has allowed 90 percent of the American consumer's disposable income to be spent on things other than food, such as housing, automobiles, leisure, and recreation."

Not all food available to the American consumer these days is grown or produced in the U.S. There are plenty of imported food products. Likewise, much of what comes from U.S. farms and factories heads overseas. But prices have remained relatively low in the United States and Oregon primarily because of high productivity and efficiency by domestic agriculture.

While the low percentage spent on food is good news for American consumers, it has not necessarily translated well to the producer. On average, farmers get back less than 20 cents of every dollar paid by the consumer. The balance primarily goes to processors, wholesalers, and retailers.

Producers receive less than half of what they used to get from the food dollar. In 1950, they received 41 cents out of each dollar. As recently as 1980, that figure was still as high as 31 cents.

Another trend in the U.S. food expenditure statistics is the amount of money spent on food consumed away from home. Last year, spending on food away from home was 48.5 percent compared to 51.5 percent for food prepared and consumed at home.

Thirty years ago, only about 34 percent of those food dollars were spent away from home. Fifty years ago, that figure was 25 percent.

The out-of-the-home food spending has spiked up again after a bit of a drop in recent years.

"We saw that portion spent out-of-home go up quite a bit in the 1990s as convenience became a bigger factor in everyone's busy daily lives," says Searle. "Then it backed off a bit after 9/11 as people tended to stay home a bit more."

Since Oregon food products often find their way into the restaurant and food service industries, the trend of eating out more is valuable to Oregon producers and processors.

USDA's Economic Research Service (ERS) also reports the Consumer Price Index (CPI) for all food sold in the U.S. increased at an annual rate of 2.4 percent in 2005 and is forecast to increase as much as 3.0 percent in 2006 as retailers pass on higher energy and transportation costs to consumers in the form of slightly higher retail prices. Still,

American consumers are getting a bang for their buck when it comes to food.

"When any of us go to the store and buy food, we look at the check register and sometimes feel like we are spending too much," says Searle. "But in comparison to other countries, food is still a bargain."

International statistics provided by ERS only account for the percentage of disposable income spent on food at home. Still, the numbers show huge disparities between the U.S. and other countries.

The U.S. percentage is 6.1 percent. The next lowest figure comes from consumers in the United Kingdom at 8.3 percent. (Note: No statistics are available in the report for Canada, which would be considered a lower percentage country.)

German consumers spend 10.9 percent of their disposable income on food at home, followed by Japan (13.4 percent), South Korea (13.4 percent), and France (13.6 percent) among high income countries.

Middle income countries include South Africa (17.5 percent) and Mexico (21.7 percent). China (28.3 percent) and Russia (36.7 percent) are seeing rapid decreases in food expenditure percentages but are still relatively high. India (39.4 percent) and Indonesia (49.9 percent) are among the highest when it comes to the amount of disposable income spent on food.

It all points back to something Americans often take for granted.

"There are few other places in the world where you can get the diversity and the amount of food for the dollar you spend than the United States," says Searle.

U.S. consumers can thank American farmers and ranchers, in large part, for that great bargain.

Every issue is not them vs us. Of course poor people spend a higher percentage of their income on food than people who are less poor...and we aren't divided into rural and non rural people the way we used to be. Who are the "urbanites"? The Ortonville residents? The residents of Albany? You are using a classic us Vs them technique by creating "urbanites".

Urbanites are not the only ones that like our current food system. Plenty of farmers have adapted to the current conditions and are doing very well. Look at USDA income and profit numbers for our local counties. We got some smart and of course also some lucky farmers. The standard of living for our farmers is better now than in the 1930's and even the 1950's is it not? Especially our local counties, that's what I have looked at most.

There are a lot of surprise land mines in place waiting for job creationists in the area. And job creation isn't going to well in the US as a whole. And if I understand it correctly there is pickiness about what jobs are ok to bring in around here yet there is no manifesto stating what jobs would be supported. There is only a negative list.

Subsidizing the farm economy is not a new idea. They do it in Europe, a huge percentage of the EU budget goes toward farm subsidies. So while producers are often on the loosing end, it took two to tango in the past. Farm subsidies helped create the food structure we have today.

Look at the sugar subsidy program, which helped create the over sweetened cereal culture we are stuck with at the moment. If sugar cost as much as honey that would never have happened. Cheap corn to feed cattle, and the developed taste for corn fed cattle is another legacy of farm subsidies that keeps grass fed cattle from finding a place in every grocery store.

The way out? maybe it's subsidizing healthy meat now to make up for past mistakes. Or taxing saturated fatty and high sugar foods to make up for past mistakes. Or both. And education, the majority of producers don't even know how to produce a tasty tender lean low corn critter. And few know enough to turn corn and soybeans into edible lentils or potatoes anymore. They would go broke trying. The desire of farmers to get together and start co operative marketing and processing is low. There is an attitude that just limiting competition would take care of farm income. Good luck with that in a more socialist country, not here.

But of course marketing takes a bigger bite out of the food dollar than farmers, does it not?

Well where did the farmer's share of the food dollar go? Did people decide to buy the cheapest, non premium food and go spend their money on housing and health care? Education, health care, housing, all of those things now take a bigger bite and some of that is voluntary some of it is not.

We could solve the marketing problem and take the marketing share of the dollar back. Wouldn't it be great if people knew enough about food and nutrition that TV marketing didn't influence their buying decisions? That would move some marketing jobs back to our area.

While we deride each other in the back waters, millions are spent advertising box cereals and lunchmeat. USDA does try to do something and then gets its credibility challenged by farmers who say our food supply isn't safe. Safest in the world but not safe? Better to pay Kellogs and Hersheys extra and get food in a box. Let the Colonel cook your chicken for you. Farm products producers are too divided. They sometimes think the enemy is Mexico when it's really the food marketing industry and lobbyists. That leaves even more room for the bad actors to exploit agriculture.

To get back a bigger share of the food dollar farm producers and their community have to be willing to value ad, market and supply.

Remember even "milk sucks!" (enormous web presence, just google) therefore it's better to buy a processed, packaged, marketed soy product. The big conventional food processors (let's call them food inventors) are the biggest spenders and profit tremedously more than the producers.

I invested in a bakery(three factory sites making artisan bread) that had potential to take wheat from field to table. That was the plan. We were figuring out how to identify the suitable wheat in the bins for the custom miller. But you know that bakery would not have had a chance in this area because they hired lots of hispanic labor and the majority of the entry level jobs were near minimum wage. We could not produce bread cheap enough and so we failed. It appears that we would not have been welcome to try and succeed in this area. Sending the processing somewhere else always means sending the money somewhere else.

If you don't want Kellogs to get such a big share of the food dollar then we have to regroup.