Farm-to-Table Markup

How It Works

The USDA Economic Research Service tracks the farm share of the food dollar, which has been declining for decades. In 2023, farmers received just 14.3 cents of every dollar spent on food at home, down from about 31 cents in 1993. The remaining 85.7 cents goes to processing, packaging, transportation, wholesale distribution, and retail operations. For ground beef, the supply chain looks like this: a cattle rancher receives roughly $1.80-2.20 per pound of live weight, the meatpacking plant processes it at a cost of $0.50-0.80 per pound, and the grocery store sells it for $5.00-6.50 per pound. The markup is even steeper for produce, lettuce that a farmer sells for $0.15-0.25 per head retails for $1.50-2.50 after washing, packaging, cold-chain logistics, and retail margin. Understanding the farm-to-table markup explains why food inflation can persist even when commodity prices fall: if processing labor costs rise, transportation costs increase (diesel prices), or retail rents go up, the consumer price rises regardless of what happens at the farm.

Related Terms

• Input Costs, The costs of raw materials, labor, energy, and other resources that go into producing a finished product, rising input costs are a primary driver of food price inflation.
• Commodity Prices, The wholesale prices of raw agricultural products like cattle, corn, wheat, and dairy on commodity exchanges, these upstream prices eventually flow through to retail food costs.
• Food Supply Chain, The network of farms, processors, distributors, and retailers that moves food from production to the consumer's plate, typically spanning 1,500+ miles for the average American meal.