Ag Industry

By former USDA Secretary John R. Block.

We keep reading that unless we increase farm production, we won’t be able to feed all the people in the world by 2050.  One way to boost food production is to respond to higher prices.  The market will tell us.  We don’t see that now.  Our farm income is half what it was 4 years ago.  Our cost of food as a percentage of disposable income is 9 percent.  That’s a bargain.  In Africa they spend 70 percent of their disposable income on food.    

In the U.S. only 1% of our people farm but in Africa 65% of their population farms.  In Africa they spend $35 billion importing food from other countries while we export $135 billion worth of food.  I expect my corn to yield 200 by bushel per acre.  Their yield is 20 bushels per acre.  The farming business in our country has witnessed dramatic change in my lifetime.  A lot of other countries are way behind. 

Our industry is driven by innovation, new technology, and an emphasis on efficiency.  Our food industry is so much more than the farm.  For every dollar spent on food, the farmer gets only $.078.  You ask, who gets the money?  Restaurants and food services get $.367 while grocery stores take in $.126.  Much of the food we eat is processed costing $.15 of the dollar.  There are other costs – wholesale distribution, ($.091) packaging ($.023), energy ($.038 cents), finance, advertising and others.

The many different segments of the U.S. food industry provide all kinds of services to the consumer.  The annual increase in the cost to eat in our country has not kept pace with inflation.  We are getting more efficient and more productive every year.

We have a big surplus of corn, soybeans, and milk pushing down prices.  Our market economy is telling us to find new markets or cut back production.  We will ride up out of this valley – hopefully soon.  Europe is suffering from drought and a burning heat wave.  Our spring planting with heavy rains and flooding will give us a short crop, and now if we can end the trade war, the sun will shine.  We have trade talks with China this week.  How fortunate we are to have the great food industry that we have.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.  If you would like to review his radio shows going back more than 20 years, just go online to www.johnblockreports.com. 

Categories: USDA

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