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April 13, 2011

Who's benefitting from higher farm prices

Higher prices for crops mean higher profits for farmers, right? Not so fast, says a new Policy Brief by Timothy Wise at the Global Development and Environment Institute at Tufts University. Looking at the latest data available (through 2009), Wise finds that while agriculture commodity prices are rising, so are costs to farmers. In fact, small- and mid-sized farmers (between $100,000 and $250,000 in sales, not profit), with an average of 1,100 acres, have seen a decline in net farm income. In 2009, small- and mid-sized farms had an average net farm income of just $19,274—continuing to rely heavily on non-farm income to stay on the land. PB11-01FarmIncomeMarch2011-4

Where is all the money going? "As any farmer knows, those small gains were obliterated by higher costs, as prices for fertilizers, chemicals, seeds, feed, fuel and other inputs followed the same upward curve as crop prices," Wise writes, accompanied by graphs like the one to the right.

In the current climate of rabid budget cutting, and higher commodity prices, agriculture programs have been a popular target. The media are trumpeting the farm boom but Wise's paper reminds us that if we want small- and mid-sized farmers to survive and thrive, we need to look deeper than the headlines—and pay closer attention to who is really reaping the rewards of higher prices.

Ben Lilliston

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