Although she is a city girl and had very little knowledge of farming before she met me, she does listen when I tell her about things like agriculture, farmers, rural life, foods, international trade, supply and demand, input costs, and the many other things that make farming interesting. She still has a lot to learn, but she knows a heck of a lot more about farming and the foods she buys than when we first met.
In addition to shopping at the grocery store, my wife watches the news on television and reads the newspapers, just as many of you do. She knows that farmers are receiving record high prices for corn, soybeans, and wheat. At times, she forgets some of the things we have discussed and wants to place the blame for high food prices on the farmers.
It has not been but a very few short years ago that the prices for most of the commodities grown in Robeson County were lower than they were 50 years ago. During the 1960s, corn was selling for over $2.50 a bushel. But in 2001, corn prices were down to around $2 per bushel, and it was not uncommon for it to drop below $1.80. Soybeans, wheat, and many other commodities followed similar price trends. Groceries were much cheaper in 2001, but I doubt very many shoppers were blaming farmers for not charging enough for the things they were growing.
It seems to me that many consumers, including my wife, fail to realize the cost of things they are buying in relation to their income. In 1970, about the time I finished college and moved to Robeson County, the average American spent 13.9 percent of their income for food. Today, the average American spends less than 9.5 percent of their income on food, and much of this food is convenience items and food eaten away from the home. Simply put, even though food is more expensive in the grocery store than it used to be, it is more affordable than it was 50 years ago.
Unless you just recently finished school and began work, I challenge you to do the same math on gasoline. I bet you will find that you were spending proportionally more for gasoline when you first began your career than you do today.
Even though this statistic about food costs seems to portray a very positive picture for prices, we must realize that the numbers are just averages. These numbers are not exactly true for all people.
This county, like most all other areas of the United States, contains both affluent citizens as well as citizens who exist well below the poverty level. Those who have higher income levels actually spend only about 7 percent of their income on food, while those in the lower income levels spend as much as 38 percent of what they earn for food.
I will extend a certain caution to those who are grumbling about high food prices. Just like the cost of gasoline, food may drop a little in price from time to time but don't expect them to come down very much over the long haul.
As long as the American dollar is weak, the price of commodities will remain high. The millions of Chinese middle class who you see while watching the Olympics are now in the position to demand the same things as the American middle class. They want boats, cars, and higher quality foods. They have the money to buy these things, but they will remain in short supply. The simplest lesson of economics is that if supplies are short, prices will be high.
If good weather and higher crop yields do create a larger supply in the future, the prices for commodities will probably drop. But the price of foods in the grocery stores will probably not drop proportionally.
So don't blame the farmers for high food prices. They don't want the price of foods to go higher anymore than you do. It is not their fault that just about everything they use to grow crops is based on the cost of oil and is influenced by foreign trade.
My wife knows that farmers use fuel in their tractors, trucks, and combines. She understands that their fuel costs have increased drastically, because she knows it costs her a lot more to fill up her car than ever before. But it is hard for her to understand just how much fuel energy is needed to manufacture fertilizers, pesticides, and other products that farmers use. For example, certain fertilizer blends cost about $300 a ton last year but now cost more than $900 per ton. The prices our farmers are receiving for the products they grow may be higher than ever before, but the prices they are paying for all their inputs are much higher than ever before.
Thank goodness most of our farmers are financially sound, because they are good businessmen and good managers. We need them to remain profitable, so they can remain in the business of producing our food.