For every dollar spent in the grocery store, what percent is the farm value?
A. 15
B. 25
C. 65
D. 35
The correct answer and explanation is:
Correct Answer: A. 15
Explanation (300 words):
The farm value refers to the portion of a grocery store dollar that goes to farmers for producing the raw agricultural commodities. According to data from the United States Department of Agriculture (USDA), farmers receive about 14–16 cents for every dollar spent on food in the U.S., which we can round to 15%. The rest of the dollar — approximately 85% — goes toward other parts of the food supply chain, such as processing, packaging, transportation, marketing, labor, and retail operations.
This percentage illustrates the large gap between what consumers pay for food and what farmers actually earn. For instance, if a box of cereal costs $4.00 in the store, only about 60 cents might go to the farmer who grew the grain, while the remaining $3.40 covers manufacturing, advertising, packaging, and store profit.
This discrepancy is due to the complex structure of the modern food system. Before food reaches the shelves, it goes through many stages — harvesting, cleaning, transporting, processing into final products, packaging, and retailing. Each step adds value and cost.
The farm value tends to be even lower for highly processed and branded foods. Fresh produce and meats usually give farmers a higher percentage of the final price, but still far less than the total.
Understanding the farm value helps explain why farmers’ income does not rise proportionately with food prices and highlights challenges in ensuring fair compensation for producers. It also informs policy discussions around food subsidies, local food systems, and farm support programs.
Therefore, Option A: 15% is the correct and most accurate answer based on USDA data and economic analysis of the food supply chain.