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> Farmers complain that they capture only a small fraction of the value of food as eaten They’re still not wrong. The difference between what they get paid for

> Farmers complain that they capture only a small fraction of the value of food as eaten They’re still not wrong. The difference between what they get paid for a potato and what I pay for a bag is quite extreme. I think it’s quite a bit different than say, gasoline vs barrel of oil, or iPhone at Bestbuy vs what Apple gets paid, or lower-end clothing. I get that potato is low value/lb, but I’m thinking the same applies as you go up the value/lb for raw things.

nine_k 5y ago
Production is cheap because it's massive and economies of scale apply, but distribution is not because it works with every customer inevitably. Every customer in a supermarket needs to interact with a cashier. Also, transporting, washing, sorting, storing are all scalable but not free, and these are important parts of the easy availability for the end customer. Then, storage is not preserving 100% of produce, some of it inevitably withers or spoils, and handling this is also not free. Potatoes are only dirt cheap if you buy them in bulk on the farm, then store in your basement, and sort and handle yourself. This is a lot of work and time spent, I've seen such an approach firsthand.
- jessaustin 5y ago
  The operations you cite aren't free, but they aren't the reason that costs of food for consumers dwarf payments made to farmers. Distribution is not a free market. Farmers sell to monopsony, and consumers buy from monopoly. Firms like Tyson, JBS, Cargill, etc. are not the immense size they are in order to create efficiency but rather to extract rents from abusive market positions.
  - Retric 5y ago
    Many companies buy directly from farmers or actually own farms. This however isn’t a major cost savings. Those distributors are actually doing a lot of work relative to the effort needed to produce it at a farm. Consider even just someone driving a semi truck from Idaho to NYC takes over 30 hours of labor one way and roughly transports one acre worth of potatoes. That’s excluding loading, packaging, unloading, etc or any effort needed to actually sell to each customer.
    - beaconstudios 5y ago
      Of course, none of this would be necessary without the idea that produce grown anywhere should be available everywhere. You don't need all that infrastructure if the potatoes you buy are from a farmer's market and were grown a few miles outside town.
      - brokenkebab 5y ago
        In 90s in my country it was a norm to buy potatoes directly from farmers. Many would find it funny that in richer places people pay more buying it washed, and sorted. However, as economical circumstances enhanced majority of urban dwellers started to pay more for washed, and sorted (and often imported, because you can't guarantee high quality of yield in any given year, at any given place) potatoes. You still can buy directly if you like, but nowadays it's mostly for students, and unsupported seniors. I don't know, maybe there's some sort of cartel conspiracy in US food trade, but consumers paying more for intermediary services is universal phenomenon. Likely after reaching some economical threshold, it becomes easier to spend for a bit of free time, and comfort.
        beaconstudios 5y ago
        I have no issue with people paying for processing, only the part where you're buying potatoes from a supermarket that came from another country when there's a farmer growing the exact same thing a few miles away. Reducing logistic complexity is both an inherent good for the environment and places distributive power in the hands of farmers to form a market or a distribution union or whatever form is applicable locally.
        Retric 5y ago
        There is no where near enough farms close to NYC to meet NYC’s food demands. Buy local can work depending on the local climate, population density, etc but it isn’t inherently more environmentally friendly. Large scale food distribution networks are extremely efficient where farmers markets high markups often mean inefficient practices behind the scenes. At the extreme end you get indoor farms for produce which takes vastly more energy and resources than using sunlight on a farm thousands of miles away.
Jedd 5y ago
> The difference between what they get paid for a potato and what I pay for a bag is quite extreme. Not only extreme, but also obscene. I recall in the late 90's someone described the poor profitability of potato growing in large tracts of the USA, and it sounded impossibly low - in the order of hundreds of dollars per acre. Sad but true -- while revenue per acre may be ~$2500, costs are ~$2000 [0] There's probably an on-topic observation to be made here about the past century or so spent driving subsistence farmers off arable land, monoculture, soil destruction, leading to an objectively unsustainable potato farming industry (in the sense of throwing more Joules into the working of the land, than you are getting out of it). [0] https://www.farmprogress.com/story-potatoes-profitable-risky-venture-9-149581 https://www.farmprogress.com/story-potatoes-profitable-risky...

nine_k 5y ago

Production is cheap because it's massive and economies of scale apply, but distribution is not because it works with every customer inevitably. Every customer in a supermarket needs to interact with a cashier. Also, transporting, washing, sorting, storing are all scalable but not free, and these are important parts of the easy availability for the end customer. Then, storage is not preserving 100% of produce, some of it inevitably withers or spoils, and handling this is also not free. Potatoes are only dirt cheap if you buy them in bulk on the farm, then store in your basement, and sort and handle yourself. This is a lot of work and time spent, I've seen such an approach firsthand.

jessaustin 5y ago
The operations you cite aren't free, but they aren't the reason that costs of food for consumers dwarf payments made to farmers. Distribution is not a free market. Farmers sell to monopsony, and consumers buy from monopoly. Firms like Tyson, JBS, Cargill, etc. are not the immense size they are in order to create efficiency but rather to extract rents from abusive market positions.
- Retric 5y ago
  Many companies buy directly from farmers or actually own farms. This however isn’t a major cost savings. Those distributors are actually doing a lot of work relative to the effort needed to produce it at a farm. Consider even just someone driving a semi truck from Idaho to NYC takes over 30 hours of labor one way and roughly transports one acre worth of potatoes. That’s excluding loading, packaging, unloading, etc or any effort needed to actually sell to each customer.
  - beaconstudios 5y ago
    Of course, none of this would be necessary without the idea that produce grown anywhere should be available everywhere. You don't need all that infrastructure if the potatoes you buy are from a farmer's market and were grown a few miles outside town.
    - brokenkebab 5y ago
      In 90s in my country it was a norm to buy potatoes directly from farmers. Many would find it funny that in richer places people pay more buying it washed, and sorted. However, as economical circumstances enhanced majority of urban dwellers started to pay more for washed, and sorted (and often imported, because you can't guarantee high quality of yield in any given year, at any given place) potatoes. You still can buy directly if you like, but nowadays it's mostly for students, and unsupported seniors. I don't know, maybe there's some sort of cartel conspiracy in US food trade, but consumers paying more for intermediary services is universal phenomenon. Likely after reaching some economical threshold, it becomes easier to spend for a bit of free time, and comfort.
      - beaconstudios 5y ago
        I have no issue with people paying for processing, only the part where you're buying potatoes from a supermarket that came from another country when there's a farmer growing the exact same thing a few miles away. Reducing logistic complexity is both an inherent good for the environment and places distributive power in the hands of farmers to form a market or a distribution union or whatever form is applicable locally.
        Retric 5y ago
        There is no where near enough farms close to NYC to meet NYC’s food demands. Buy local can work depending on the local climate, population density, etc but it isn’t inherently more environmentally friendly. Large scale food distribution networks are extremely efficient where farmers markets high markups often mean inefficient practices behind the scenes. At the extreme end you get indoor farms for produce which takes vastly more energy and resources than using sunlight on a farm thousands of miles away.

Jedd 5y ago

> The difference between what they get paid for a potato and what I pay for a bag is quite extreme. Not only extreme, but also obscene. I recall in the late 90's someone described the poor profitability of potato growing in large tracts of the USA, and it sounded impossibly low - in the order of hundreds of dollars per acre. Sad but true -- while revenue per acre may be ~$2500, costs are ~$2000 [0] There's probably an on-topic observation to be made here about the past century or so spent driving subsistence farmers off arable land, monoculture, soil destruction, leading to an objectively unsustainable potato farming industry (in the sense of throwing more Joules into the working of the land, than you are getting out of it). [0] https://www.farmprogress.com/story-potatoes-profitable-risky-venture-9-149581 https://www.farmprogress.com/story-potatoes-profitable-risky...