The Produce Dollar Breakdown Through the Lens of Local

Growing food is a hard way to make a living, especially for small, organic producers who don’t have the benefit of chemicals, subsidies or economies of scale to boost their bottom line. But this is also why the price tags on local and organic produce are often higher than large conventionally grown produce. But just how much of the money we spend on food actually goes to the farmers who grow it versus everyone else further down the supply chain? Can buying local really make a difference?

According to the USDA, for every dollar we spend on food (organic and conventional together), only about 16 cents goes to the farmers who produced it. This number includes food that’s sold at restaurants and commodity  crop production (like corn for corn syrup). If we just look at fruits and vegetables grown for at-home consumption, that number jumps to more like 25 cents. The other 75 cents pay for people and services off the farm: the diesel, truck and driver to move the food from farm to processing plant; the cost of storing it until it’s sold; the people who sell it wholesale to grocers; plus the retailers who sell it to you.

When you take into account the fact that farm production costs have gone up the past few years to 10 cents on the dollar in 2012 (that number is even higher for organic farmers), it means that when you buy a dollar’s worth of produce, say a pound of carrots, about 15 cents gets back to the farmer. And if it’s a big farm, the workers who picked those carrots are likely only getting a penny or two back per pound.

So how can buying local combat this system? For one thing, food that doesn’t travel as far has fewer transportation costs. And that proximity can better sustain smaller operations that do their own processing and packaging. Secondly, co-ops like the Wedge support small farms that don’t need all that overhead to compete, so more goes back to the people in the fields. Thirdly, Co-op Partner’s Warehouse (CPW, the Wedge’s distribution business) has a unique crossdocking system that enables small-scale operations without delivery infrastructure to expand the reach of their  products while cutting down on miles driven. It eliminates the need for each individual farmer to drive to all the co-ops in the Twin Cities separately, saving even more on distribution costs.

Here’s how it all breaks down:

Typical U.S. At-Home Produce Dollar* Typical Wedge Produce Dollar**
25¢ Farm Share 39¢ Farm Share
55¢ Processing/Retail 35¢ Wedge Co-op (retail)
8¢ Energy 13¢ CPW (distribution)
5¢ Packaging 8¢ Energy
5¢ Transportation 5¢ Transportation (direct delivery and other distribution channels)
2¢ Miscellaneous
*USDA Economic Research Service

**2014 Twin Cities Cooperative Local Food System Case Study and Wedge accounting department

There’s nothing easy about food production, and at the Wedge we believe that farmers should be fairly compensated for their hard work. By building a local food system, we’re trying to make sure more of your dollars get back to the people who sustain you and your family, one pound of carrots at a time.

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