Farm share of retail price for flour fairly stable since recovery from 2016-17 low point

Farm share of retail price for flour fairly stable since recovery from 2016-17 low point

The farm share of the retail price of all-purpose white flour—the ratio of the price farmers receive for wheat to the price consumers pay for flour in grocery stores—averaged 13 to 14 percent in 2016 and 2017 before reaching 19 and 20 percent in 2018 and 2019. In the latter half of 2017, farm prices rose in connection with lower-than-expected U.S. wheat production. In mid-2018, as the 2017/18 U.S. wheat crop matured, dry conditions in the Northern Plains further trimmed wheat production prospects. In response, domestic wheat prices rose again, despite abundant global wheat supplies. Ultimately, U.S. wheat farmers received an average price of $4.72 per bushel for their 2017/18 crop, up from $3.89 in the previous year. The farm value of the amount of hard red winter wheat needed to make one pound of all-purpose white flour increased from 7 cents in 2017 to 9 cents in 2018 before falling back to 8 cents in 2019. The average retail price of flour fell from 51 cents per pound in 2017 to 46 cents in 2018 and 44 cents in 2019. Costs for milling, packaging, transporting, and retailing also affect what consumers pay for flour at grocery stores. The Economic Research Service (ERS) forecasts higher farm prices for wheat during the 2020/21 marketing season and moderately higher retail prices for cereal and bakery goods, a category of products that includes all-purpose white flour, through 2020 and 2021. This chart is based on the Price Spreads from Farm to Consumer data product on the ERS website.


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