Lisa Simpson
Oct 26,2009
In: Finance

Icome From Farms is Decreasing While Grocery Deals are Increasing

Consumers are raking in some advantages as farmers are enduring the biggest slump since the last 35 years. Supermarkets are showing a drop in food prices as income from farms decrease while grocery deals increase.

According to the forecasts from Department of Agriculture USA, income from farm will be $49.1 billion in this year – 2009. This is after taking into account inflation and adjusting with the same. It calculates to a drop of 39% from the previous year. 2008 had been a bonanza years for farmers who had raked in $80.4 billion after deducting costs. This year is also witnessing the largest annual drop in percentage since 1983. Calculated in dollars it is the most disastrous since 1974.

Consumers are somewhat benefiting from the woes of the farmers said Richard Volpe of Department of Agricultural and Resource Economics of University of California-Davis. The prices of pork and milk products in the supermarkets have gone down but nothing in comparison to what the farmers are getting for their products. Volpe explained the prices of foodstuff have gone down because the supermarkets are competing with each other to woo the customers in these days of recession.

Milk was being sold for $2.98 per gallon this August as against $3.89 in August 2008. On the other hand dairy farmers say that they are getting $11.80 for 100 pounds of milk as against $18.40 in 2008. This is according to the figures of Bureau of Labor Statistics.

In the shop the price of a pound of bacon fell from $3.84 in August 2008 to $3.59 this August. During this same period farmers saw the price they got drop to $39.70 from $60.70.

A variety of reasons have combined to league against the farmer – fall in consumer demand right across the globe, swine flu and a weak market for ethanol said Bob Young of the Farm Bureau. He said, “All of that is hitting at once. It’s a bad year. This is the sharpest year-over-year decline we’ve seen. … I expect to see some operations have to shut down.”

The fall in prices has hit every corner of the farming sector but the most affected are hog as well as dairy farmers. Both had gained from exports to the emerging countries but the recession has now hit them badly said Mitch Morehart of USDA. Expenses however continue to remain high.

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