This seems patently absurd to me:

JAMESTOWN (AP) — With food prices rising along with skyrocketing commodity prices, the North Dakota Farmers Union wants the public to know just how much of their food dollar actually ends up in the pockets of farmers.

The farm group on Wednesday is hosting ‘‘Farmer’s Share’’ meals throughout the state, inviting people to sit down for a spaghetti lunch and a little education.

Farmers earn just 20 cents for every dollar spent on food, state Farmers Union President Robert Carlson said. Non-farm-related costs, such as marketing, wholesale distribution and retail costs, account for the other 80 cents.

Let’s look at how a farmer’s crop typically makes it to market:

First, the farmer grows the crop and sells it.  Depending on the crop, sometimes its sold to a grain elevator which turns around and sells it to a food producer or sometimes its sold directly to the producer.  Either way, the producer then turns the crop into some sort of food product (bread, etc.).  Sometimes the producer turns it into an ingredient that is in turn sold to another producer.  Eventually the crop is made into a product and either sold directly to retailers or sold to them through a wholesaler.  The retailer then turns around and sells it to the public, often eating the price of product that goes unsold.

According to Supermarket News the gross margin for most retail grocers is about 25%.  If farmers are making 20% too that leaves about 55% of the income for the folks who turn the farmers’ raw crops into processed, packaged, marketed and transported food.  Given that this process often includes several other companies (transportation, etc.) I don’t think it’s entirely unfair that farmers “only” get 20%.

That seems rather fair.  After all, all the parts of this process are interdependent.  In order for farmers to get their crops (or the products resulting from these crops) into markets around the nation, and the world, they need these other players.

20% seems pretty equitable to me.