Danville-area small farmers feel price pinch

When a cash-strapped consumer opts for the cheaper cut of meat in Danville, Marilou Maglione and her husband Andy feel it.
When grain prices soar, they feel it more than the bread aisle browser. Not to mention they’re doling out more for diesel fuel.
Being hauled into a global economy has marked a structural shift on the food industry and like many small farmers, the Magliones, who operate Breezy Oaks Farm in Mebane, N.C., are bearing the burden of fickle markets.
Rising costs are “putting hurt on a lot of small farmers” Marilou said. “The price of the grain itself has gone up tremendously, delivery fees have gone up, (and) fees to actually produce grain. …But then the consumer doesn’t really want to pay more than what they’ve been paying forever.”
Raising pigs, chickens and wild turkeys, the Magliones already face competition from powerhouse agricultural businesses with larger scales of production. As a small farm, their business is particularly sensitive to a fluctuating stock exchange.
“The profit margin for the farmer continues to dwindle,” Marilou said. “Unless people can truly appreciate the taste and the health benefits of products coming from small farms, small farmers will be pushed out of business.”
Blame it on the economy
“As with anything, nothing’s ever just a one-thing answer,” Mike Roberts, a commodity marketing agent with the Virginia Cooperative Extension, said.
“There’s been a fundamental change,” he said. “Corn and soybeans used to be tied to the price of food — if our economy is good and you had extra dollars in your pocket, you would maybe go out to eat more, or get a higher priced steak. When the economy went down, you would settle for cornflakes.”
But with hedge funds investing in commodities, grain prices intertwining with volatile oil and natural gas markets, and food being used for fuel, that’s all changing, many experts say.
“Now the prices of corn and soybeans that goes into our food doesn’t come from the money in our pocket,” Roberts said. “It’s the cost of energy. When energy goes up, our food will go up. When the cost of energy goes down, the cost of food will go down.”
As the Magliones watch the numbers climb while fueling up their few pieces of farm equipment, they have to make tough decisions.
“Instead of spending a couple hundred a month (on gas) …(we’re spending) $800 a month,” Marilou said. “It makes it difficult then to continue to offer services such as delivering of product. It’s just not cost effective.”
Higher diesel fuel prices are part of the reason food prices are rising across the board.
“Food prices are jumping because the cost of transportation energy is jumping high and diesel prices,” Roberts said. “Also, it takes electricity, energy and propane to process our food, so the electric bills are going to go up.”

Blame it on biofuels
Grain prices on the Chicago Board of Trade have increased tremendously over the past year, in part because corn and soybeans are increasingly being converted into biofuels, analysts agree.
In general, consumers suffer least as producers and manufacturers eat most of those costs.
“What we used to get for six cents a pound is now 12 to 15 cents a pound…Corn and soybean,” Marilou Maglione said. “I guess they’re all going to ethanol, so the farmer’s prices are a lot higher so that a small number of people can burn ethanol.”
While noting much of the increases in the cost of food are due to high input costs relating to fuel and fertilizer, Stephen Barts, a Virginia Cooperative Extension agent for Pittsylvania County, also acknowledges the effect on grain of the emerging bio-fuel craze.
“You start putting in industry like the ethanol industry (and) a certain amount of supply is taken away,” he said.
Barts also noted that while that supply is diminishing, demand is growing.
“We’re becoming a player not only unto ourselves, but a little more in the global market,” he said. “As countries like China have a higher standard of living going through their industrial revolution …you have a finite amount of product (fertilizer, grain, etc. and) you have growing numbers of people that need to get their hands into that finite amount.”

All tied together
In this expansive economy with commodities inextricably linked, small farmers, in general, have a very small amount of power.
Take a simple staple. A loaf of bread essentially has three steps: the farmer, the manufacturer (who turns the grain into a loaf), and the consumer.
“If you run a motor to make dough out of flour, wheat or crushed corn …your costs have gone up per unit, per loaf of bread,” Roberts explained. “Most of the time, the (manufacturers) can pass those costs along to the consumer. However, the farmer cannot.
“Just because a loaf of bread went up four quarters, the farmer can’t walk in and say ‘I’m going to get 10 cents more per bushel of wheat.’”
Already struggling under trade agreements like the North American Free Trade Agreement, and contending with larger regional businesses — like Smithfield Hams for the Magliones — “family farmers” are being swallowed by international markets.
“Our value of the dollar in the global market has sunk so low we don’t have the buying power as a nation that we once had for the limited gasoline or fuel resources,” Marilou Maglione said.
Those resources directly contribute to the farm’s ability to produce, she said, adding purchasing trends aren’t helping that because bulk products from overseas are expensive to transport.
“By buying imported food, you are supporting an increased and unnecessary use of fossil fuels,” Marilou noted.
While not insensitive to consumers’ economic needs, she stressed the importance of “looking at the big picture for taste, health and global impact.”
• Contact Sarah Arkin at or (434) 791-7983.