Lesson 01 · 3 min · 5 things to do
Most of the price is not the food
Split a retail price into the shares that reach each part of the chain.
A loaf of bread costs £1.40. Roughly how much of that reaches the farmer who grew the wheat?
- Yes.A loaf contains a few hundred grams of flour, and wheat is priced by the tonne. Nearly everything you pay is milling, baking, packaging, transport, energy and the shop.
- Not quite.That is roughly what people guess. It would make the farmgate price of wheat about ten times what it is.
- Not quite.Closer for some foods — fresh produce, mostly. For a processed staple like bread the farm share is much smaller.
The further a food is from the field, the smaller the farmer's share. Processing, energy and retail take the rest.
Slide between foods and watch how the price splits.
A loaf of breadLoose potatoesA ready meal- The farm6% of the price
- Milling, baking, packaging45% of the price
- Transport and energy14% of the price
- The shop35% of the price
A loaf of breadWheat is a few pence of it. Everything else is the making and the selling.
- The farm30% of the price
- Washing, grading, packing20% of the price
- Transport and energy15% of the price
- The shop35% of the price
Loose potatoesBarely processed, so the farm keeps a much larger share.
- The farm4% of the price
- Manufacturing51% of the price
- Transport and energy15% of the price
- The shop30% of the price
A ready mealThe ingredients are a rounding error beside the manufacturing.
Wheat prices double. Which of these three items rises most, in percentage terms?
- Yes.Doubling 6% of a price adds 6% to it. This is why a commodity price spike makes headlines about farming and a modest difference at the till — and why the reverse is also true.
- Not quite.It has the largest wheat content of the three and still only about 6% of its price is wheat.
- Not quite.It has the smallest farm share of all.
Move the control to see what changes.
Which of these costs rise when energy prices rise?
Fertiliser.
Refrigerated transport.
Running the ovens and the factory.
The shop's rent.
Chilling the aisles.
Yes.Energy touches nearly every step, which is why food prices track energy prices with a lag of months. It is the single most reliable link between two apparently unrelated headlines.A loaf sells for £1.40, and the farm's share is 6%. How many pence does the farmer receive?
pYes.Eight pence. It is why farm incomes are so weakly connected to what shoppers pay, and why a campaign about supermarket prices rarely reaches the field.What does the small farm share tell you about 'buy local to support farmers'?
- Yes.A short chain leaves more of the price with the grower, whether the farm is five miles away or fifty. Distance and directness are different things, and it is directness that moves the money.
- Not quite.Local food sold through the same long chain returns roughly the same small share.
- Not quite.It can make a large one — through farm shops, box schemes and markets, where the chain is short.
Lesson complete
The further a food is from the field, the less of your money reaches the farm.
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