If you’re involved with agriculture and have ever been on social media around the holidays, you may have seen one of those graphics that compare the consumer’s cost of, say, a Thanksgiving meal to the price the farmers receive for each of those foods.

Even if you haven’t, you can imagine the differences between those two values. That type of comparison is referred to as the “farm share,” and it’s something that USDA’s Economic Research Survey collects data on regularly and calculates every year for a variety of farm products and commodities. To kick off the March 24 Hoard’s Dairyman DairyLivestream discussion on retail and farm gate prices, attendees estimated what the farm share was for a gallon of whole milk and for a pound of Cheddar cheese.

The correct answers from 2018 data were higher than viewers guessed.

  • Farmers received the equivalent of 52% of the retail value of 1 gallon of whole milk.
  • Farmers received the equivalent of 28% of the retail value of 1 pound of Cheddar cheese.

For reference, strawberries had a 35% farm share, tomatoes sat at 29%, and the versatile product of potatoes were 17%.

The cost of cheese

The farm share of fluid milk is actually one of the highest among products USDA follows. Why, then, is there such a drop-off to the farm share of cheese?

Of course, there is value added in the processing of that product that requires investments in equipment, labor, and time. Further, Sartori CEO Jeff Schwager recognized the transportation and storage costs they incur. “In our case, we’re aging cheese. When you think about a product, from the time we make it, in a lot of cases we’re holding that cheese a year before it ever gets to a grocery store,” Schwager said.

Then there are the marketing costs associated with branding and promotions, he shared. Sartori markets premium cheeses to restaurants, grocery stores, and international customers. Developing that customer base and recognition takes time and money, particularly when battling geographical indicators on the global marketplace.

The work put in by cheesemakers such as Sartori to add value to American milk makes U.S. cheeses recognizable around the world and desirable at home and abroad. Americans’ appetite for cheese climbed every year in the last decade to reach a new high of 38.3 pounds per person in 2019. That’s a demand that dairy farmers will continue to meet.

An ongoing series of events

The next broadcast of DairyLivestream will be on Wednesday, April 7 at 11 a.m. CDT. Each episode is designed for panelists to answer over 30 minutes of audience questions. If you haven’t joined a DairyLivestream broadcast yet, register here. Registering once registers you for all future events.

To comment, email your remarks to intel@hoards.com.
(c) Hoard's Dairyman Intel 2021
April 1, 2021
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