Perspective: Food Cost vs Production


Food costs are rising. No doubt about that. Have you been to the meat, dairy, or vegetable aisle lately? And you thought that pain at the pump was the only hitch in your giddy-up these days… Food costs may be rising, but what about the cost to produce that food?

Here is a little perspective for ya. Yesterday I went down to the service station to fill my 100 gallon gas tank. From this tank we fuel things like 4 wheelers (on which I check cattle everyday), lawn mowers, chainsaws, and even our feed wagons. The price of gas today is $3.699 a gallon. 370 bucks for that one stop! That’s like leaving half of a weaned calf sitting at the gas pump.

That doesn’t count our 1,000 gallon diesel fuel tanks. With diesel at an easy $4.009 a gallon, that’s 4,000 bucks a fill. If we’re still counting weaned calves, that’s 6 calves left at the fuel tank! If you want to start counting land, equipment, barn, vehicle, loan payments, taxes, depriciation, etc… Well, there goes our whole calf crop. Can’t forget our monthly living expenses; electric, water, groceries, and even those heavy boots for long days on our feet. Yep, my wallet is feeling the pinch just like every consumer out there.

Maybe you’ll appreciate this perspective on food prices from a situation in my ranch life. Take a minute to think about all the hard work that goes into producing the cattle that turn into beef. Not only do food producers pay the same for cost of living, but they make that living, so we can eat. Thank a farmer for converting grass and grain to a usable form of nutritious protien, vegetable, and grain on your table tonight.

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14 Comments

  1. In my opinion, alot of this has to do with ethanol production here. Last year the US devoted 104 million tons and ten billion gallons of petroleum to produce ethanol. Despite this fact, we far exceed what we can consume here and its then shipped overseas. Ethanol in its present state is a downright nasty business for US Farmers and Consumers.

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  2. I think we equated it to making six dollars, giving back four dollars for all it took to make the six, and then being left with two dollars to spend! Woooo! sigh……Dang input costs! (I typed “inpout” first… that was probably more accurate!) 😉

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  3. So I have read many of the Blogs that Ryan has put out on Facebook and to be honest this one has been the best informative. BUT let me give you another way to look at it. I was sitting at the table of wisdom and knowledge(the coffee shop table with the old Farmers), and one farmer explained to just work ground for his crops cost him $10 an ac. Ok think about a big farm has 2,000 ac. Just a thought and that was last years prices. I thinking that with prices like this it will be BIG farms in the delta just to be able to afford the gas to work and water the fields. I have even heard this week that farmers are not planting RICE this year because they can not afford to pump the water to water the rice. How will that affect us?

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  4. Two thoughts on this. First, make it legal to grow industrial hemp. Henry Ford wanted to use it for fuel rather than gasoline (Methyl alcohol). He also made plastics out of it, as well as being the highest source of carbohydrates of any plant and yields more per acre than any other crop. Some countries are now using hemp fibers mixed with resin for building material.

    Second thought…Everyone assumes that using machines is faster..But by the time you go into town and fill up, plus the time you spend getting the 4 wheeler or pickup pulled out of the mud, are you really getting things done faster than you would if you just saddled up to go check the cows or fence? (Not to mention when you do find a sick animal(s) and have to go back for the horse anyway) The horse eats about $4 ad day in hay and doesn’t cost near as much as a four wheeler (let alone truck) while your pickup burns how much a day?

    Technology can be good, and machines can be useful, but we need to pick and chose when we use them or we will be spending more time and money than we should.

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  5. The bad thing is cattlemen are struggling due in part to high feed caused by $7 corn my profit margin on corn is actually less than it used to be with $3 corn. So my question is who’s making the money cause its sure not the people working our tails off everyday to produce the food.

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    1. Corn farmer here. We are certainly enjoying the price of corn right now, but we all fear a repeat of 2008 when the bubble burst, but input costs remained high because dealers bought too far ahead with expensive materials. I was at a marketing meeting a couple months ago, and the grain marketer made a good point. He would much rather see consistent $4-$5 corn rather than the big swings that have been happening lately. We need a bumper crop to stabilize prices, but seeing the storm rolling through right now, and more rain later in the week, I’m starting to think I won’t have seed in the ground until May. We finished April 30th last year.

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  6. I, like most ranchers who are selling cattle and not buying right now, am enjoying the high cattle prices but, I do realize that in our current economic conditions all prices…..not just in Ag, are unsustainable.
    Strong market speculation and manipulation are driving prices ever higher. With commodities prices pushing all time highs yet again, Wall Street is back on the Ag bandwagon. Folks who don’t even know what a FAT is are investing in them like they are going out of style. Although I am strongly for free market, some regulation are going to have to be passed to put the futures market back where it belongs. The futures markets purpose was for the farmers, ranchers, and users of Ag inputs to hedge against price risk so they could produce a steady and predictable food supply.
    Now after I say that there needs to be regulation, I am going to contradict myself and say that the government needs to stay out of Ag./Business all together. I may get hung up for this but, subsidies have got to be cut back. I am for ethanol….IF it can compete in the market place without a 50 cent per gallon subsidy. Why are we paying to keep land fallow when the market demands more production? Why do we pay 4x more for sugar than the rest of the world? Protective tariffs must go. If we can’t compete, we have to adapt and change to specialize in other areas.

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    1. I won’t hang you up for saying subsidies need to cut back. I don’t have the solution, but I think direct payments need to go and I think a lot of other farmers think so too. Here’s want I would like to see regarding ethanol, and it’s starting to look like we might be going this direction. Get rid of VEETC and but some money towards helping station owners put in pumps. That was at least the consumer has a choice. Make it more available to the market then anyone who has had Econ 101 knows that the “Invisible Hand” will decide if it flies or not. People are worried about older vehicles running on biofuel, but in 10 years the percent of cars that can run on a higher blend will be greatly increased. The government’s place should be to help a budding industry gain a foothold, not to mandate that there be a market. On the other hand we have got to stop relying on foreign energy as it comes back to bite us everytime. I think it’s funny (not really) how the current administration wants to be one of Brazil’s best oil customers, and we’ll pay them to do the drilling that is unsafe to do in our own waters apparently. But wait, isn’t Brazil and other South American countries pretty well energy independent largely in part due to biofuels. Hmmmmm……..weird.

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  7. Brett, we raise sugar beet and cane in this country, so is it really the tarriffs running the price of sugar up? Look at drug prices…Go to a vet and pick up a bottle of dex, then get a shot at the hospital…price jumps from a nickel to over a $100 per cc.
    Those new $40,000 pickups assembled in Mexico are done in plants where the highest paid people on the line make $10 and the lowest paid only make $2.50 an hour. You or I cannot go to Mexico and buy one there (at roughly half the price) because of the “free trade” agreements.

    If we had tariffs on everything, then all of our manufacturing would not have gone overseas. In fact, that was how the government made all of its money before they started up with income taxes…

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  8. As I mentioned earlier, you farmers need to check out industrial hemp and start making a big stink as to why you can’t grow it. Henry Ford was making methyl alcohol out of it as well as plastic car bodies. It is also high in carbohydrates, can be used for making soaps and building materials. Amazing stuff, but Dupont wanted to sell nylon rope to the military, and the oil companies wanted to use gas to power cars. They teamed up and managed to make it illegal to grow. Unlike its cousin that is rolled and smoked, industrial hemp has no drug value…Google it.

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  9. Cattlemen are struggling because prices have not kept up with input costs, period. To put it in perspective, I turn 57 in a couple of months. I remember gas in the 1960’s being as low as $0.18 a gallon, a quart of oil was $0.45. When I started shoeing horses nails were $0.90 a pound, shoes were $0.60 a pound. The average ranch wage was around $300 a month and a NEW 4wd pickup was under $10,000. Calf prices ranged from $0.45 to $0.80.

    These record high calf prices are less than three times what they were then but:
    Gas is $4 a gallon, a quart of oil can run nearly $4 a quart, horseshoes nails have been over $12 a pound and shoes are nearly $2 a pound. That new 4wd pickup is over $30,000 and if you find someone to work for under $1500 a month they probably don’t know much.

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  10. When you add up all the fuel that goes into growing corn to feed to cattle, and making hay to feed to cattle, plus feeding the hay, stockpiling forage makes a lot more sense. Ag is unique in that our two main inputs, rainwater & sunshine, are free. Add to that mix nitrogen fixating legumes and you’ve got another free input. Interesting that as we have substituted inputs for management we have become more dependent on those inputs.

    Considering that ag schools teach (and tell) kids to be input salesmen and not farmers and ranchers, it shouldn’t be that surprising.

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  11. Vines_N_Cattle,

    “Considering that ag schools teach (and tell) kids to be input salesmen and not farmers and ranchers, it shouldn’t be that surprising.”

    That is best comment I have seen on the main problem in agriculture! Schools get grant funding through the companies which sell input items, so why should we be surprised? The same goes for every industry publication…they make their money from advertisers who are selling input items. As a result, every article, every editorial column is basically telling us what we need to buy to lower input costs. What the schools and publications need to be teaching and publishing is articles on how to remove input costs…

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