10x Your Food Dollar to Farmers

Prior to 1920, farmers took home upwards of 70 cents on every consumer dollar spent on meat.  By the late 1930s the farmer’s share had fallen to 51 cents, but we still saw the majority of our food dollars returned to the farmers growing it.

By 2007, that number had fallen by more than half, to just under 23 cents.  This was due in part to larger payments accruing for lawyers and bankers over that time period, as well as for restaurants and food service businesses. As Americans began to dine out more over the course of the century, these outlets gradually captured a larger portion of our food dollar.

By far the largest gains have diverted to the processors and marketers (these are the brands you would recognize in the grocery store, like Tyson and Purdue), and this is particularly true in the chicken industry.

These companies market themselves as partners of “independent family farmers,” but the data shows them to be…well, not the greatest of partners.

Most chickens in the US are raised under contract.  Tyson, Purdue, Pilgrim’s Pride and others provide the farmer with chicks, feed, veterinary services, antibiotics – and often loan money to build a chicken house.  They provide exacting specifications about how chickens are to be raised.  And they purchase all of the finished chickens when they have reached market weight.  Typically, these companies pay in a “tournament style” in which the farmer receives a base cost per pound, plus a bonus.  The bonus is calculated by comparing total costs (feed, vet services, etc) to the total pounds produced; those with the lowest costs are disproportionately rewarded over their neighbors.

On one hand, this seems like a nice arrangement – a franchise-like business where someone hands you the proven recipe for success.  In reality, it is kind of like someone tying you and your neighbor’s hands and feet together and organizing a triathlon.  Some folks finish, but there is very little upside.

In what other business does someone else control the cost of all of the inputs and the price of all of the outputs, and require that they are both sole supplier and sole customer, and often the mortgage holder too!  These contracts (if they extend more than a single year), are also almost always “flock to flock,” meaning there is no commitment on the part of the company beyond the current flock of birds.

It’s no wonder the farmer’s share has declined under this scenario: contract chicken growers today typically earn just 5-7 cents per pound.  This is not real business ownership, as there is no agency on the part of the farmer. It more closely resembles employment – only with no benefits, no minimum wage, none of the common protections of employment, combined with all of the downsides of business ownership.

Here in New England and New York, we are forging a different path.  Our members’ participation in the share program provides meaningful and lasting long-term commitments to farmers.  Our farmers and butchers earn almost 60 cents of each food dollar spent – almost 3x the US average, and 10x a contract industrial chicken farmer.  And 100 cents of your dollar stays right here in New England and New York, supporting a revitalization of our foodshed.