D4-Lancaster Fanning, Saturday, February 27, 1999 THAT MUCH-MALIGNED MIDDLEMAN John D. Rutherford Jr. Farm Management Agent Lebanon, Berks, and Dauphin Counties There was a time when farm land was wide open space, in habited only by farm families and the occasional small town. Mae of the production from area farms fed the nearby population. People bought basic ingredients such as milk, meat, flour, and vegetables directly from local farmers or from the stores which bought from the farmers. The linkage between field to table was relatively direct, short, and involved few intermedi aries. Contrast the historical setting to the current food system. Except for U-picks and other roadside stands, the correlation between lo cal production and local consump tion is relatively small. Consumer preferences are the primary reason. Fresh fruit and ve getables in the winter months, tropical fruits, and foods that re quire only a minimum of in-home preparation are products that don’t come directly from Lebanon farms. When foods have to be transported from great distances, stored for long periods of time, or processed in some way, the con nection to the farmer gets weaken ed. Each person, company, or pro cess associated with a food prod THREE LOCATIONS INTERCOURSE, PA MIDDLETOWN, DE McAUSTERVILLE, PA 800 732-0017 800 3414028 800 4388679 CASE Hi ' 1998 CASE CORPORATION Visit us on the Internet at http /, m \w cnsccorp com JHHHHHHHHHHHHEEHHH Case IH is a registered trademark ol Case Corporation Up jirne All the lime uct before the food is purchased by a consumer is lumped into the category of “Middle Man.” (The term is very old and perhaps in need of updating to the more poli tically correct “Middle Person.”) Middlemen are particularly mis trusted by the farming population because of the difference between the price a farmer receives and the price charged in a store. Let’s look at how much of a difference there is between farm and retail prices, and discuss some reasons that these differences exist We will start with an example from the dairy case. Milk is sold off the farm in quantities of 100 pounds, called hundredweight. For each hundredweight produced in July, farmers are being paid about $l5. A gallon of milk weighs 8.6 pounds, so there are 11.6 gallons of milk in every hundredweight of milk sold from the farm. Dividing the hundred weight price by 11.6 means that the farmer receives $1.29 out of the price paid in the store. If milk sells in the store for $2.25, the farmer’s share comes to 57 per cent of the price a consumer pays. The example is a very simpli fied version of the calculation of the farm-retail price spread. For one, not all milk that leaves the farm is of the same quality. Typi cally a dairy farm is paid more for milk with a higher butterfat con tent There are other quality mea SALES EVENT EVERY PIECE OF USED EQUIPMENT ADDED BONUS: RED TAG SAVINGS ON SELECT NEW & USED EQUIPMENT lE2S2BE& sure tests given to milk that equate to how much cheese it will yield. Farms that sell higher quality milk receive slightly higher prices. Another difference is that not all milk goes into gallons. Some be comes half-gallons, some pints, some is flavored, and some be comes cheeses, butter, ice cream, and other products. Showing the public where the food money goes is a project of the U.S. Department of Agricul ture (USDA). The USDA tracks the amount and price of milk and other farm produce that are put to different uses, along with the price charged for these products when they are purchased by consumers. This data is reported in the Farm- Retail Price Spread charts that published quarterly. See the table included in this article. The num bers listed after each food cate gory indicate the percentage that goes back to the farmer of each dollar you spend in the store. Different conclusions stem from this data, depending on the group to which you belong. If you are a farmer, you feel the retailer and middlemen are getting too much of the price of food. If you are a middleman or retailer, you don’t understand why farmers can’t produce more cheaply or why consumers won’t pay more. If you are a consumer, you don’t understand why farmers, middle men and retailers can’t lower their prices. This is why we have an economic system of (relatively) free markets. Whoever does any of the func tions necessary to put food on the table more cheaply, or better said, more efficiently, they will reap the rewards. Farmers need to realize that the spread between farm and retail prices covers transportation, processing and labor, safety, ad vertising, product development, market research, and the cost of unsold product If the middleman is profiting so greatly, then farm ers should look into possibilities for processing on their own. If middlemen want to increase prof its, they need to look into integrat ing with production facilities. In deed, much of the poultry industry has already done this and pork production is moving in this direc tion. If consumers are concerned about the price of food, they need to learn to pepare foods from basic Grain Producers Announce Scholarships EDGEWATER, Md. - The Maryland Grain Producers Utilization Board has allocated $5,000 of grain checkoff funds to support the second annual scholarship program. The program will be adminis tered by the Maryland Grain Producers Association, which will be awarding two deserving students with scholarships in the amount of $2,500 each ($1,250 for each semester) enrolled in a Maryland or an out -of-state institution. The purpose of the scholar ship is to provide financial sup port to students interested in pursuing an agriculturally relat ed career. Given the dynamic changes in agriculture today, the advances in biotechnology, glob al positioning systems, environ mental protection, crop and live stock production, Maryland’s grain farmers believe it is very important to encourage students to consider careers in agricul ture by enhancing their educa- Heavy Duty Headlocks Finished with TGIC Polyester Powder Coating... Superior to Epoxy! • Extra Heavy Construction • Yokes lock on individual catches • Yoke stabilizer on large sizes • Designed for easy entry & exit • Removable neck bar Added Value With Our 2 Coat Process! _/1 Five step metal preparation, including iron phosphate conversion coating, to enhance adhesion & prevent undercoat corrosion Paul B. Zimmerman, Inc. 295 Woodcorner Rd. • Lltitz, PA 17543 • 717/738-7365 Hours: Call or write for additional information Mon. - Fn.; 7-5 and the name of your nearest dealer Sat.: 7-11 ingredients, buy directly from farmers, or start raising items on their own. The Farm-Retail Price Spread is presented by the USDA in the publication “Agricultural Out look.” Copies of the latest tables can be obtained by contacting your county cooperative extension office. We also have information on obtaining “Agricultural Out look” or you can contact the USDA directly. tional development through the use of scholarships. “Agriculture is undoubtedly not the same as it was with all of the technology available today,” said Breck Debnam, president of the Maryland Grain Producers Utilization Board. “The agricul tural community needs a strong educational foundation if we are going to take a second look at a career in agriculture.” The scholarships will be awarded to full time students attending a 4-year institution or students enrolled in a 2-year agricultural program. The selec tions will be based on agricul tural background, family farm involvement, financial need, grade point average, agricul ture-related studies, career goals, and extra-curricular activities. 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