Decomposing the Farmer's Share of the Food Dollar

Abstract

AbstractThe Canadian farm share for five crop‐based products and seven livestock‐based products from 1997 to 2010 is calculated using a supply chain IO analysis. Significant differences exist in farm shares across food commodities with higher farm shares for livestock products and lower farm shares for grain‐based products. The decline in the Canadian farm share for food consumed at home is driven in large part by the food purchasing habits of consumers. This paper also addresses the hypothesis that the decline in the Canadian farm share could be partially driven by rising input costs in post‐farmgate processes or rising input costs that have greater impact on downstream sectors than primary agricultural producers. Three experiments were conducted to assess the impact of an increase in the cost of corn, energy, and farm labor would have on commodity output prices, farm returns, food expenditure, and farm share. In all three cases, the overall farm share increases, albeit by a small amount, suggesting that these shocks have a larger relative impact on the prices of agricultural commodities than the prices of marketing commodities used in post‐farmgate activities. A two‐period comparison of these simulations shows that energy (corn and farm labour) price shocks would have had a greater (lower) impact on the farm share in 2007 than 1997.