The time is one minute now past 12 noon. Today's programming on these NPR stations is sponsored in part by an anonymous friend in honor of all things considered today on our public affairs. Our we will look at the planting intentions of farmers and what it means to everyone else including consumers by the end of the hour. We hope to have a clear picture of what goes into the six to 8% food cost increase the Carter Administration Economist are predicting this year our hosts for this Newman's program or Dan Olsen whose here in our studios in St. Paul and John St. In Moorhead 1st wheel here Dan Olson. Thank you Richard Bateman. Good afternoon everyone every year about this time. There is a small ceremony in Washington DC when officials of the US Department of Agriculture release what is called a survey of planting intentions and that is intended to show what farmers are thinking of planting and in a way the release of the intentions is Asher signal that spring has arrived in a moment. We'll learn the intentions of farmers in this country asCorded late last week by the USDA University of Minnesota agricultural Economist. Will Anthony will explain why they are important and what they mean, then we'll talk with a spokesman for a food processing firm about their expectations for this year. But one of the Green Giant company will answer our questions in that regard. We will also hear from a food retailer about the outlook for prices at that point in this country's food. Chain our guest in Morehead for that portion of the program is Bruce hornbacher up Hornbacher's supermarkets. Before we get off before we get to all of that we must begin with the farmer and there aren't many of them left in this country. The Census Bureau says there are about 7.8 million people living on farm for about three and a half percent of the population of the farm by the government's definition can be as small as 10 acres and produce as little as $50 worth of produce for sale each year. Most of the food produced in this country comes from farms that are a bit larger than that. In fact, the average size of us Farm is about 400 acres and most of the food produced in this country comes from the most productive group of farmers. They are about half the farm population. Most of them are family Farmers believe it or not a husband and wife team with children often some hired help or cooperative agreements with neighbors, but they are Family Farms. So the long chain of production packaging transportation and processing that brings us our food begins with the decisions made by individual Farmers. One of them is Jermaine Bowl farms in the rolling Countryside of Western, Hennepin County. We have a primarily a dairy herd or heard that we milk for tea cause it's it's more less of one man's heard. We on 200 Acres of our own. We rent 300 a I will be planning the 80 acres of corn about 40 acres of soybeans in about a hundred and twenty Acres of hay and I will participate in the set aside program and and will have approximately 19 acres and set aside last year. We had 95 Acres. So I am cutting back about fifteen and corn and we're cutting back on some soybeans and now is to cut back all because of the set aside program or are you coming back for other reasons most of it for set aside? Another reason is I think we've got I think we've got too much corn in and about Eighty Acres is what I need for my Dairy herd. So I guess I'm not going to add do any of the surpluses next year or the corn that I raised our price. Merely going to my dear Ian important factors that help him decide what he'll plan one was the fact he's a dairy farmer Farmer in the Red River Valley of Minnesota where the land is flatter and more fertile would likely raise the cash crops such as quick rather than a crop for livestock feed the set aside program that bull referred you should be familiar to many of us by now is the government's plan to pay Farmers to not grow certain crops. It is another item on Bowles list when he decides what to plant and I suppose the next would be which cramp which compass and surplice. What what crop has the best potential for next year and I kind of just lean this way or in that direction and this this proportion would be my cash. Crop. What about crop rotation? Does that play a part in your planning to very very definitely a does here? I guess I feel to mention that we've got very Rolling Land on my farm is contoured and we do have to have us all we have to have a good rotation or We lose too much of our topsoil know that rotation is almost exclusively for purposes of soil conservation and maintaining fertility to yes very much for fertility to a theater plays a big part that especially where we raised a lot of baleful. We can use a quite a bit last night or Jen then where the fella raises commercial crops every year. That was far more germane bowl from Western Hennepin County will hear more about his cost and what he thinks about the prices. He's getting a bit later in the program. The intentions of farmers, like wool were released last week by the US Department of Agriculture University of Minnesota agricultural Economist. Will Anthony is with us today. He was one of the many interested observers. No doubt. Will what do those numbers tell us and maybe you can begin by summarizing some of those numbers. Okay, Dan, let me try to summarize briefly. Although the Denis Norma's amount of material to try to summarize briefly what the intentions did tell us is that farmers were as of a What the 1st of April expecting that they would be planting somewhere between 1 and 2% fewer acres in the Major Field crops and they find it last year Nationwide. They said that they were expecting to plant about 80.2 million acres of corn. That would be roughly 3% below last year's corn acreage. They said they intended to plant around 63.7 million Acres of soybeans. That would be between 7 or more Acres of soybeans than last year. They said they intended to plant about 4.1 million Acres of durum wheat which would be almost 30% above the last year about 13.2 million Acres of spring weed which would be somewhere in the neighborhood of 15% below last year's acreage some of the other crops about 16.4 million Acres of oats, and that's off about 8% from last year's roughly a 6% reduction and barley acreage and have some interest in Minnesota is an intention to plant about 17% more sunflower acreage. Then we had last year will some of those numbers strike me as I guess somewhat surprising especially the spring we'd figured. 15% reduction does that figure do you think harken the Carter Administration as part of their set aside program? Does that bode well to for farmers. Do you think the fact that they are thinking of reducing acreage and perhaps as a result of increasing prices? Yes. I think it does down and I'm sure that it does reflect in part the thinking on set aside on weight our calculations on through midwinter were indicating that they set aside option under the program on weed was not too bad in terms of profitability and we were thinking that there would be really fairly substantial participation in the spring. We'd set aside. Yes. Now there is a fair amount of secrecy associated with these planting intentions numbers. In other words. There's a small ceremony in Washington DC in the officials come out and they deliver the pieces of paper with the numbers on them and they're not released beforehand. What is all that's what is all that secrecy for. What is it about? Well, maybe in part of governmental Pomp and Circumstance then I don't know but there is a problem with these kinds of major reports in What is that? They do have a fundamental impact on the market because people are buying and selling grains in anticipation of what they think supply and demand are going to look like in the future as well as what they think supply and demand are looking like just now. Consequently if the reports are released in a haphazard fashion in the sense that if information is leaked so that someone might get access to it before the trade in general does it will then become possible for an individual to do execute trades on the Chicago Board of Trade Minneapolis Grain Exchange in the Futures market and and Reba hands and profit if his information is right. It'll be a little bit like it like knowing in great detail what the house odds in the procedure War behind the tables in Las Vegas for sure and so favorable trade could be made by a Speculator. For example on a Grain Exchange. How did the Futures the wheat futures for example react when it was announced that spring we'd might be down as much as 15% of the grain market was quite strong last Friday. What was released last Thursday afternoon that they always release them after the close of the major grain markets says so as to give the market a chance to at least digest the numbers overnight the market did behave quite strong last Friday corn was a little bit weak at the opening a primarily because the expectation had been that the corn acreage reduction would have been a little bit more than in fact, it turned out to be a reduction that at 15% that you referred to was a little bit above expectations and consequently the wheat Market was strong of the soybean Market was also very strong last Friday and in general all of the grain markets closed higher now based on your comments. Will there seems to be the assumption that these USDA planting intention numbers are reliable and I'm curious about that. How reliable are these numbers and how are they gathered? That's a good question. I guess any time a person is trying to evaluate how reliable any sort of survey data. Are you if I remember right from my statistics classes in college they were about four You need to consider how good is a sample that is being asked and how biased are the responses if they're biased it all in this case how consistent are the intentions with the actual plantings if we do see and finally I suppose there how good are they in the sense of how does the market respond to them? I'm interested in that one. The reliability of the sampling that is due some Farmers attempt to mislead the government and everybody else who watches those figures by reporting intentions. Other than what they will do. Yes. I think they do down. In fact, it's been one of those things that you do. If someone more concern over the last few years, I'll let you in total Nationwide the Department of Agriculture through the state crop and livestock reporting Services asked or survey. Roughly Forty-Eight thousand Farmers Nationwide to get their intentions. It's a it's a statistically random sample of a professional statisticians drawing the sample. It's not a haphazard sort of a thing in Minnesota. They were Early 2000 Farmers that do with it were surveyed again on a very very well put together a random sample bases. Well are the results for the sample bias to the survey bias. I think good not in General on the intention survey because if I think for everyone who expects the de maybe they could influence the market by reporting fewer intended Acres of wheat than they really were thinking of fighting that don't have to report intentions to plan something else and that would influence the market the other way and and consequently you get into kind of a Sticky Wicket that you're going to use the data manipulated to affect the market is an individual. So these numbers that were released in Washington last week by the USDA apparently have considerable impact on what happens at least in a few places in this country and notably grain exchanges. And in what other Farmers May plan to do as a result of their spring intentions, right? What would happen if the numbers weren't released what would happen if there were no spring Clan? Oh, I think not very much. The the rain would fall summer would come the flowers would Bloom the seed would get put in the ground and we'd have a crop by Harvest after off. However, what would happen is it if they were not these kinds of public surveys made in the major grain companies that made your processor. Don't simply rely on you put together pretty good dude kinds of data on their own. I think that is a matter of fact if the US Department of Agriculture surveys were not made the people that would it would be in the dark would be the public and General on the farmers in particular and what does happen and I guess really the fundamental importance of the planting intentions from the standpoint of the farmers is that if they see intentions to find sharply higher in some particular crop, it does give an opportunity to shift into other crops soon in advance of producing the crop that might unfavorably depressed the market that was Embassy of Minnesota agricultural Economist will Anthony and our other guests today bud wanted the Green Giant company and Bruce hornbacher of Hornbacher's will certainly have something to say about your comments in about what their expectations for food prices are this year. But before that we return to Farmer Jermaine Bowl, this is a tricky time of year for Farmers like Tremaine Bowl because their expenses are high and a good share of their income comes only when the crop is sold and that could perhaps be months from now until then many farmers arrange their financing in a businesslike, but typically informal fashion when he's getting all his herbicides and insecticides in his fertilizer in his seeds and he's getting this all together. He goes to his desk and then he look to see how much money has gotten any system Seed Company say, can you hold me till July and and he talks to the fertilizer. Manny says he how long before I have to pay this and and he goes over to the bank or and he says that Can I get a short-term loan for this or that I I guess maybe I don't probably have quite as much problem is some of them do because I have a dairy farm and I've got a monthly income. We're a lot of cash Farmers have got a yearly income and a half days. I got a tied himself over for one years old. It's more of a problem to them than it is to me but I understand their problems. And before we leave the issue of planting intentions of farmers to explore what food processors and retailers are thinking there is one other question to be asked to Farmer bowl. Is he making enough money? That would be a question that's kind of hard to answer that. I know a lot of farmers considered a should be getting 100% of Purity and I think that's nice and I wish we could all do that. But I think we have to be realistic what I'd like to do on I'd certainly like to recover my cost of production. But I do think that in order to be competitive with our products overseas that whenever we get a hundred percent of parity. We're going to price yourself right off the market in I'm a consumer myself and I'm very interested in the price of of everything in the entity no matter what it affects today. I guess as long as we can make enough money to pay our bills and and I guess that I'd be satisfied with that. You know again, you got to consider everybody is making a living in between them. They always talk about the middleman sure the middleman but Is this is providing a lot of employment for a lot of consumers? So I guess I couldn't say that was only the middle man's fall. I will I'm sure there's some people down the line. You're probably making a little more than what they should farmer Jermaine ball and we'll explore that question of just who is making how much do of the people who've been listening to this portion of the program Mark Bruce hornbacher and Budweiser and Bud wand is director of agricultural planning and Affairs for Green Giant company in Le Sueur, but Jermaine Bowl talked about the fact that he is influenced by market prices government programs. What are some of the factors that influence your decision making at Green Giant and I guess before we get to that question we have to back up a little bit then have you describe for us what part of the food system in this country you occupy? Whole Food Processor such as Green Giant occupied that that segment of the food stream that goes from them farmer himself to the grocery store shelf if you want to look at it that way the processor is one who may do nothing more then trim the product up a little then package it so that it can be distributed and stored in such a fashion that they Altima consumer reaches. I'm in a condition to where it is still wholesome food and in the condition that mrs. Housewife will buy it but what about the planting intentions released by the USDA? Is that anything the Green Giant pays attention to or do you have other factors that are more important? Planting intentions to a food processor such as Green Giant have a long-range implications are not short-term decision-making tools because of the fact we have locked in our prices that we are paying Farmers way back in January long before planting intentions tensions have come on for the current crop year. They do have an impact. However on what we will be doing at your for them now that means that you have quite a different relationship with a farmer and I guess it we could begin at the point where the relationship between you and the farmers start you in other words sign a contract with an individual farmer to have him grow a certain amount of a Commodities that right. That is correct. Now, how does that Arrangement work? You guarantee that farmer a price? We are guaranteeing a farmer a price for his production starting in January when he signed his contract and that price will be for this year's crop which will be harvested this summer and fall. It is a guaranteed price reduction. And then what happens after that crop is harvested you take the product and do you control it from there or do you pass it on to somebody else? We process the price of the product in whatever form it may ultimately end up. We put it into a it's put into consumer sizes or into institutional product size is stored until The rest of the middle manager referring to purchase some from Green Giant for the ultimate distribution to the consumer. Let's stop for a moment and talk about some of those costs that you face that are perhaps quite different from what a farmer like your main Bowl May face. What are the cost items that are of most concern to you? In this day and age that we're in now one of the biggest concerns for a food processor comes in the area of energy energy costs are driving up distribution costs because that's basically energy and also for the process I can solve tremendous amount of energy is used. The labor is also very key cost item in the food processing business. How would you categorize a green giant? Would you call yourself a large food processing company or are you a more more locally oriented company? Green giant I think many people think we're a much larger company than we are. For the size of green giant, which is small compared to the Giants, but we have National Distribution as well as International. We are a food company, which is well known in the vegetable business and becoming more and more well-known in the Entre type of business today where we provide more convenience for the housewife for side dishes and so forth for the table and when you say compared with the other Giants in food processing industry, I get the impression in the Green Giant is not as large as some of the Giants how would you rate yourself in size and who are some of the Giants? Some of the Giants located right here in course of Minneapolis here in the state of Minnesota Pillsbury will be rated as one of the Giants in the food industry and green giant compared to a Pillsbury is relatively small. Who dominates the market do you think in your particular area of food processing and canning vegetables, especially I'm thinking up now. Are you considered a leader or is the is the competition quite stiff? We are considered a leader in the processing of sweet corn and the processing appease. And those two categories we do not dominate but we are large enough that we are considered the leader. However think in terms of like 70 processors United States sweet corn and peas or more and so they're stiff competition out there is it but they're in other parts of the country. Is that right? The most of those other processors know that's not true. I do not believe most people realize how many processes right here in Minnesota are a lot of major processor such as Del Monte Stokley Libby's as well as some Regional process of those National processors then are they more are they as competitive and selling sweet corn for example, because they are larger and so it's cheaper for them to to process sweet corn. Despite the fact that they may be located across the country. Not necessarily largeness is not necessarily bring with a lower cost per se. Regional markets vs. National markets in the food distribution and what kind of a market these are pick a processor's go after has more dictates more in terms of what the hell it's a low cost for a high cost of a product that they're producing that was Bud one who is director of agricultural planning and Affairs for Green Giant company will be back with bud and will Anthony and just a moment because we're going to put some other questions to them all related to the cost of food. And what will be happening about 23 minutes. Now after 12 noon also with us today is John HD and Moorhead who has as his guest Bruce hornbacher John retail grocery business Bruce hornbacher is the vice president for Hornbacher's foods, which includes three supermarkets in the Fargo-Moorhead area. Doernbecher, we've been hearing in the discussion so far about that the planting intentions of farmers and the price out looking farm products, so I'm going to just how closely you watch the agricultural steam do planting intentions have anything to do with your plans for the future year in your retail stores. Truthfully, we don't stay very close to that kind of situation where they're concerned because we're in the Red River Valley and it's one of the major growing areas in the world. And if our farmers in this here, we're going to get a projected low Market. We know that the it would bring an economic pressure in the fall that we wouldn't want that that's about as close as we get to the situation that you're buying and you'd be concerned the people in this area might be able to purchase the kind of thing. They would want or that the economy of the whole area would be a would be a hurt. That's that's correct. Is there any direct relationship between the car and the Casta did the farmer get to the price at the farm against for his product? We've we've gone through an agricultural depression and they in the last year and we seem very low prices for weed friends. I think people really have really wonder does the the price of wheat? I have any effect on the on the price of a loaf of bread. It's certainly doesn't seem to I think the bus. Just just what his connection there. Well, I agree that's probably the most discussed product in the world as far as food and the consumer goes and there are a lot of things that go into the actual retail value of a loaf of bread and one of the base things this week, but that is just the start then you go to the finished product of flour and it follows with things like sweeteners shortenings wrapping materials manufacturing labor benefits provided to that labor. There are other indirect changes that come along with that also and then the driver sales compensation that bring these commercial beds to the stores advertising promotion and a host of other expenses that are involved in the production of a loaf of bread and then the questions that are brought up. How do we eliminate some of these costs? Will then we have to reflect on that and here are some of the things we might put to the consumer or to whoever is interested. We have to store the week in a silo when I want to leave the field. We can't eliminate The Silo and and that cost are we have to transport the product to the mill somehow we got to get the product to the mail. We can't eliminate that we have to process the product. How do we eliminate that cost? And then it's sold to the baker through some merchandising program either a broker or some means of selling and how else would the baker get his product and then finally it has to be truant transported to the bakery. These are things we questioning and how do we eliminate one of those things? I can't come up with a good answer, you know, if it's something we should all reflect on the Wanda again. I just don't see any way to eliminate one of these steps when you talk about the amount of the farmer gets on your shelf. I think we're going about three sensor still worth of bread. And I I guess when you would when you understand that figure, then it becomes apparent that when we prices might drop and 1/2. We're still talking about maybe a set and a half drop in the price of a loaf of bread. If it were going to reflect that reflect the cost of the farmer friend since 2 years ago. We had a tweeted that $5 now it's at about two and a half cents. Do you get enough of impact in that loaf of bread so that you would drop your bread price that I sent and a half when that happens or doesn't it do all the people along the line of just absorb the parts of that Penny and a half and so by the time it gets to your shelf you priced is the same. That's true things. The weed has dropping again. We I guess realize that that is a minimal part of the lobe after I mentioned the things that I previously did the things that probably are constantly off setting that in one of the biggest is labor that the goes into the processing of the flower and then the selling and the transporting of of the products of these things might have been and might still be constantly Rising even though that weed is dropping he know the cost of plant and other things could be increasing at a rate that would be a double Adam would offset at these are all these things that feed into the finished product retail and it's very complicated but it's there we deal with it everyday so we can we can get a feel of it just like the farmer, you know experiences that bad feeling when is is wheat Margo's a we experience those things in our business then to get them explain and to the consumer. So that they understand is either real difficult situation. When they are you talk about costs involved in your operation. What are the most important? If you don't have to watch the price of agricultural products, what are the important things that a supermarket manager has to keep in mind as it has he looks down and keep his operation efficient. What are the important things? Well, one thing it was mentioned earlier in the conversation was an energy cost situation is probably tripled in the last three years and that's becoming a big part of the cost control situation in the supermarket and we're taking many in-house measures to control that and we're also getting more I guess scientific in our purchase of equipment so that we do become more efficient. But again, one of the things we deal was Directly with his labor control and we are continually trying to be more Innovative in in ways to to use labor better and more efficiently and that I would say that that is probably one of the foremost thing and then another thing is in the I'm in the bakery business. Also a cost of equipment is something that's really changed dramatically in the last four or five years doing in the it's got to be reflected in the face product. You mentioned the energy to begin with and a long night with energy to keep your store lighted and heated. There's the energy involved in transportation. I think this is one of the issues that the beginning to come to the Forefront that I was talking to the Northwest area vegetable Growers were located in the the Red River Valley and the president that group was lamenting the fact that quite often during the summer when vegetables they see their vegetables that tomatoes for instance shipped to Idaho to be sold in supermarkets there while at the same time. We have a semi truck load or a trainload of tomatoes coming up to the Red River Valley in the Fargo-Moorhead area from California so that we have tomatoes right here. Linda or paying for the energy to to ship tomatoes from California now, but that seems to be a little bit back for it and that I wonder it. Is there a way that we could cut some of those middlemen costs that we've all been talking about by looking more regionally at the food buying and the food processing and shipping products across the country. Well, the thing that we're dealing with it with his a free market system and if a large wholesaler like Supervalu goes out on market for like a product like tomatoes. He's he's going out looking for enough product to supply 22 to 2400 supermarkets and That's the thing is foremost in his mind. He wants quality and he wants price. Well one thing he has to be concerned with it just plain enough product in it and many producers can supply a product for that much business. So he has pretty good leverage and goes out and maybe he'll be buying four or five cars at Tomatoes at a real good market price as compared to one semi load, which doesn't even come in to the Ballgame price-wise. So that's one thing that you know, he has an obligation to we have an obligation to get the price for the consumer at the at the lowest value in for the best quality. But another thing that comes into play is it there is some marketing organizations for certain pots just don't have very good strength. I think in the Red River Valley Crystal sugars got a very few no solid strong base as far as marketing and they have a I would say 95 to 97% distribution Factory in all the supermarkets in this area and it's you know because of their marketing background. Another situation is the Red River Valley potatoes. They are very strong and they they get their product distributed very very solidly in the community and in the valley, it takes a lot of strength from the marketing organizations to get their product and keep it in the Forefront to so that plays an important part. I'll have more questions about the the whole middle man concept, but then I think we'll go back to you right now. And if you got some more questions that you like to ask mr. Hornbacher right now to sell. All right, John. Thanks a lot. And thank you Bruce hornbacher back in st. Paul with guest will Anthony from University of Minnesota Bud one from Green Giant company about 26 minutes. Now before one one of the questions that John put to Bruce hornbacher, I think is a question that we ought to take up and put two will Anthony and Bud wanted that is the issue of food distribution in this country. Do we have a good food distribution system and specifically will I'm curious about the point of efficiency the fact that we have fairly large supermarkets. We have a trend toward larger farms in this country larger Growers of all sorts, and in the process we are told that that keeps food prices down and I'm curious to have your reaction is to Whether or not that is a good or efficient food distribution system. That's a very difficult question and I responded by paraphrasing something that I once heard. Someone say it's the worst of all possible government in this case is the horrible distribution system. The only thing worse is anything else you can conceive her and consequently, I think the one can identify a host of of specific and efficiencies things that he'd like to change if he were the Tsar but when you look at this at the at the entire distribution system and try to conceive of ways in which to reorganize the total structure one is just very hard-pressed to do that because one goes to an extremely centralized ton of a distribution system uses any inevitably wind up with all of the inefficiencies associated with centralized bureaucracies with planning problems, etc. Etc. One of the things however, that struck me very much by one. Hornbacher's comments was the reference that he made it to the priority that an organization that a large organizations buyer has to put on availability of Supply meaning that if a large organization that he is going to special or merchandiser distribute or whatever handle through its retail outlets. If it's going to handle a specific item it has to be terribly concerned that it is dealing with a sufficiently large purveyor of those items in order to have the supply consequently in a sense Big B gets big when you look at it and therefore the small suppliers small farmers or who might be interested in supplying vegetables to a local market do have some difficulty breaking into that system. Bud wand of green giant. I presume that green giant started out as a local concern perhaps an owl as you say you are a regional Enterprise. What do you think about the distribution system? What is What are the facts of life that have created Green Giant companies view of life you might say? Oh, you're right. So we started out small. We're having her 75th Anniversary this year, which is kind of unique would like everyone to celebrate with us here in the state of Minnesota. We are now on National and international company starting from a small little Basin Le Sueur of producing a few thousand cases of cream style corn back in 1903. So it's it's been a long road up, but we've expanded tremendously and they moved to For the what the consumer we think the consumer wants I guess in that leads to a question. I had response I guess to a question that's been thrown out. Why why do we have to have large supplies consistent supplies so that Supermarkets will take us up and and B are our customers. I think one of the things were in the collecting here is the consumer demands and attitudes that are out there for instance of a grocery store wants to run a feature on those Tomatoes you're talking about and puts out coupons on them what happens when the store runs out and there's thousands more coupons for Rolling In then you've seen a lot of things in newspapers are worth about that stone this distribution of Marketing System. We have it makes it even more complex near than it used to be. I have a question on that issue of Demands, but and this is a question for Bruce and Moorhead to perhaps and that is how much of the consumer demand that we hear so much about has been created by the processors and by the supermarket managers themselves, and I guess I'd ask Bruce hornbacher to respond to that. Demand for me quality product or what? What do you have in mind? When you asked the question? I'm so Bruce. I was thinking especially of demand for certain package good. So for a long time in this country items were sold fresh from the Shelf. There was a minimum of cellophane. There was a minimum of cardboard packaging in them. But over the years we've seen extraordinary sophisticated packaging means I'm just wondering how much of that has been created by genuine consumer demand and how much has been created as a result of the processors and food retailers ideas that this will sell more food if they package it this way, you know, the the question is is complex in and it's been created by both. I think today's consumer or consuming family is a is a busy family most families are both parts of the household are employed and there are looking for ways to have more. Free time when they do get back to the home setting and I guess this is evidenced by the the fast food Trends in America. And by the way, that's becoming one of our foremost competitive situations in the supermarket industry. It's something worth thinking about every week that we put our heads together and and and every week when we plan it's gets become a very intense thing with us and it's something very concerned with and I think one of the things that's been Innovative with green giant Francis is at the end of this Entre business in the frozen food areas, especially in the have capitalized on and what the consumer really wants so Again, they're both playing in AndroGel Prague and this merchandising and product. Do you think we're going to see a time here in the not-too-distant future when supermarkets and food processors are going to be required because of old. Let's say energy shortages High Cost of Transportation as a result that consumers will be offered many more fresh items on Supermarket shelves and ever before and I don't have the bud respond to that person and maybe Bruce we have seen a steady decline in the amount of total tonnage of fresh vegetables. It's a gradual decline. We have yet to see any spurt or increase in demand for fresh. Although it is consistently always been there and probably will continue to be there but Fresh Products even in today's Marketplace or on a pound-for-pound basis of obviously much more expensive than the processed and Bruce. What's your reaction to that while he has hit it right on the head, but I think that There is a definite Trend to going back to this ball clock or this this bulk idea and we're trying to participate, you know in that Trend in our stores know he is writing in that regard about the purchase of a fresh product. It is salad processed in some cases most definitely why is that Basically, it's because of the urgency of being our lack of time holding time of being able to store that product both it there. At the farmers level as well as it within the distribution system. And as well as that you're a supermarket that's head of lettuce doesn't lay there and wait for the customer to pick it off the grocery shelf 2 weeks from now and that gets to a question that I had hoped would pop up and you've both of you of let nicely right into it and that is in the food processing sector and in the food retailing sector there are deadlines and Bud before the program. We were talking about deadlines for the Green Giant company. If certain deadlines are not met it can have disastrous consequences, and I wonder if you could describe some of those especially as it relates to the harvesting operation. I think some people realize our don't do not realize so fresh and so green giant has a very popular item. Just been with us long time called Le Sueur peas what you're a teeny early June. The total annual supply of these pieces back in about 16 to 18 days. That's the only time they're really available for processing. You can see the intensity and the confusion if you want to look at that way, I'm getting that product harvested on time. So you have a high-quality product which is going to be supplied to the supermarkets for the remainder of the 12 months of the year. Now if you miss Harvest Time on that particular product, does that mean the consumer prices for it's a crop is substantially reduce. The consumer prices will be quite High because of the shortage. if there is a shortage in processed vegetables and any one of the individual process vegetables it tends to Raise the price of that particular item however, now there's a lot of substitutability and processed vegetables and just because the early June pack might be down people will tend to buy sweet peas. If I'd rather than pay the additional price for the early June. I'm Bruce hornbacher in Morehead. I'm curious about the food retailers reaction to the problem of deadlines. Are there deadlines in a food retailer season that are critical to you so that you will either make or lose money as a result of not meeting certain deadlines. We're faced with that in all our perishable areas. There's only a certain amount of shelf life for most product and we have to deal at on a you know. Sometimes hourly and and sometimes twice a day basis in in parishville area. So we we do have that kind of a crunch all the time. And another thing that we're aware of and it's probably more related to The Fruit markets is like the the season ability of things like strawberries or watermelon or cantaloupe for other things that we try to be close to Market with thing. We were talking about in terms of large distributorships dominating the what what happens in the supermarket and where the supermarket to buy this product. And I wonder if Bruce if if there is a any sort of leeway between your contract with Supervalu, you're affiliated with Super Value Inn and your ability to purchase food on your own Princeton stem. If you would take the same truck load of tomatoes that would you be able to get some time to buy my tomatoes or something like that fresh from the Red River Valley and a week old as opposed to buying them through the Super Value chain. Are you pretty much locked into the the distributor with a contract? We aren't locked in but you know, it gets more costly when you start dealing with like you have a manager for a certain product. Dealing with four five. Different suppliers it takes time and the time is going to be reflecting the price your product if you waste too much of a doing things. So you try to stay with someone that's consistently good as far as quality and price, you know, so that you get a uniform product, you know, 52 weeks a year to the consumer but we do deviate when there is a local markets that open up we do purchase local product. But a lot of times those products don't have, you know, can't come on a 7-Day week basis we can't depend on it. So we still have to have that back up thing from a from a major distributor. You see the trends and toward bigness and towards the largest distributor. Is there a is that is that the way it's going to continue to go and instead of a regionalization of distribution? Well, I know that in supervise case they have tried to personalize their perishable areas, especially in protists. They now have their own. People that are right out in the field selecting a product is before they had two hired somebody like a broker that would do it for them. Now. They've got the people on their own payrolls trying to make things even better for the consumer. So they really spend a lot of money and got out there right with the product so that they know our consumer gets the quality at the right price and tries to get it to her as soon as possible John. I'd like to have will Anthony react to that too and perhaps give us some background and what he thinks will happened in Trends on the farm. We've noticed for example over the years. Will that Farms continue to get a bit larger each year. Will they continue to get larger? And is that good or bad? Do you think Well, yes, I think they'll continue to get larger and one of the things down that is been striking me very much in this particular conversation as well as in a number of others use of the difficulty that we have in conceptualizing agriculture conceptualizing in the sense that did that the statistics and the averages and so on are are so difficult to apply to any specific individual for example, the kinds of people that do within talking about in conjunction with the supply of vegetables and fruits to the retail Market are of a substantially different kind of Agriculture. Then is the end the other individual investor Hornbacher's area who is in the business of growing wheat and barley on a large-scale. So there are so many many different kinds of farm operations and kinds of production that the averages in the trends are such as dually one a bit bewildered. If not totally lost when he's trying to apply them. However All that then I think the answer remains. Yes, is it good? No innocence. It's not good. I think that if one uses as one of his sets of criteria for goodness this that a social structure of many people in rural areas and all entering the market on substantially the same terms with freely available Market entry inability to go to market their product dealing with the buyers in the processors on equal terms. And if one conceives of that has somehow a good kind of her own Society then the trend toward larger and more specialized is is not good on the other hand. If one looks at any specific individual Farm families who are in the business of farming these days it certainly is for them a much more pleasant much more amenable and comfortable life than it was for their fathers who were farming on a different scale. In the meantime, we're all getting our food and we all of us almost all of us have about as much as we want to eat. And it's there almost whenever we wanted to send Ryan precisely and this brings me back to the planting intentions it down the did, you know sent these data on what farmers are intending to do with their soil this coming year out to be one of the fundamentally most important news items that we have because it's going to affect the how much food we have to eat as well as how much grain we have to export however a by and large we don't get terribly excited about it because the grain is going to be the plan find a devout as Dependable as we expect the sun to rise in the morning that too is terribly important, but it's not a very newsworthy item because it always happens and and we expect it to happen when we get excited. I generally use one of the expected it doesn't happen. We get excited when the can of green giant peas turns out to be a spoiled will get excited when the lettuce 1mr Hornbacher's shelf is welded or something. We get excited occasionally when the when we run into a shortage of grains in the United States, for example, 73-74. We had some fairly poor crops in addition to unexpectedly large export demand. The result was a sharp upward movement in price many of the repercussions were just beginning to feel in the beef industry for example, but we then got excited as a public. We got excited about agricultural production, but the but otherwise we sort of expected to go pretty much on course. So John and guests were looking at a food cost increase that has been estimated by Carter Administration Economist to be in the neighborhood 06 to 8% and to try to pull this together. I'd like to get your reaction on that figure the estimate for food cost increases I think was about 4 to 6% a little bit earlier this year now. It's up to 68%. To get from the three of you your reaction to that increase whether or not you think that's in the ballpark and secondly whether or not you think food is still a bargain because we get that line a lot that food. This country the USA is is a good bargain. We don't pay much for it. So first, what do you think of the cost increase will Anthony? Well, I think that one of the reasons for the increase in the rate of increase in food prices on the park Administration is the fact that they're not expecting that the overall rate of inflation is going to be rising at a faster rate consequently Transportation energy labor and all these costs are going to be rising a big factor in addition in addition through political pressure in a number for a number by the reason there's been some change in the farm programs which will result in a somewhat greater decline an acreage isn't it been anticipated in January? We will have a small impact on increasing prices at a rate higher than would otherwise have been the case 3rd late. We've been seeing the continued very sharp devaluation of the dollar relative to other currencies and what that means. It wasn't food prices is it foreign buyers were coming in to buy are grains with the Japanese yen in the German Mark and so on are in are demanding at a much higher rate than was earlier anticipated. Because they're higher valued currency can buy more than it used to so all three of these reasons about an impact on on that increase sand and salt what it is back to the question. So I suspect that a rate of increase in food prices in that the 8% or so is a pretty reasonable expectation. Just no so is food still a bargain well, It depends on how you measure it. I can't answer that question. All right, we we may come back if we're not going to let you out quite that easy, but one from Green Giant, how does that 68% increase so square with the figures of Green Giant? Again, we're looking at it in terms of as the new programs come on stream new actions out of Washington at that 68% is becoming more and more of a reality in our book and it's so when we look at food prices and where they're going to have to go because of the increasing cost they seem well in the ballpark. I think you'll be seeing at 8% Now. What about the cost of food are Americans still lucky and getting a bargain? We have to think so early in the food processing business. There are very few countries United States and I am I lost a name any at this point in time to where the consumer dollar or the take-home dollar will buy as much food as it does here in United States when you talk about 17 18 cents on the dollar to feed compared to many countries where it's high as fifty or sixty cents. Are we are we believe food is a tremendous bargain here in the United States and hopefully we can continue to keep it that way now to excuse me, but you had something else while the, is it like to make the Waterwheel out to us saying about the farm program. I look at the year ahead of us to be a very interesting year for Agricultural Marketing for food cost you want to go to that away. The fire program has done something that's never been done here. And as long as you and I have been alive that is just created a situation. Where are the market really doesn't know what's going to happen and has no way of predicting it the new Farm program. allows the farmer to Tell or join the farm program and in the innocence is telling everyone that what he's going to do, but she's really not he's really not telling any of us what he's going to do in the way of planting he can still pull out all the car and that he died last year or I can plant all the play beans or I can plant all the weed but nobody's going to know that in fact, I think we're going to have a very sad situation was very interesting. Also. We are seeing the surpluses where there are surpluses and there are especially in the area of corn and those are places are in the hands of the farmers not in the hands of the government and this will be very interesting to see what kind of marking situation develops out of all is not a doctor in Moorhead. What about the cost of food Bruce 60% do you think But I think there's a there's a possibility that could happen this year. And I guess I'm sort of repeating some of the comments made when we we we compare ourselves to other countries were at the bottom of the pole as far as cost to the consumer goes against their gross take-home pay as far as a part of their annual budget running around in the 19% area, so it's something that I guess the whole Spectrum from the planning to the merchandising is something that we can sort of proud of it in again in this country. And there are going to be times when certain areas are affected adversely. I realize that but you know, I may be this year is the year of ketchup at this 6 8% is going to come to the farmer then maybe that's it's time that happened. You know, we'll have to see what that whole will answer any of the questions I want to put to you is that there are many different ways of measuring what the cost of food is to a particular citizen in our country. I have the impression for example that for people in the lower economic income strata of our society that food costs are considerably more than 19 to 20% that they may in fact be 30 40 45% Working with averages sure, I think by any other objective kind of standards in the world at a time when the average American Consumer is paying 16 to 19% of his take-home pay for food. They say you have to say that it's bargain is cheap relative to other countries in the world. However, we have such a very great Divergence in the income distributions in the country that we do see the situations are some people having to pay a substantial part of their take-home pay for food and other people paying very very small proportion of their take-home pay for food furthermore. I think regardless of whether they're paying a 35% or 15% for anybody for any consumer a bargain is really a little bit cheaper than they're presently paying for it consequently. It's the difficulty I think for them to to see it as a bargain the the problems though again is a matter sometimes of applying averages and we do have that difficulty I think as an agricultural production and distribution Industry one does have to say yes food. As a proportion of take-home pay is very very loyal nevertheless. There are many people for whom it is a very significant item with our budget and also work for many people will the the purchases of food as a proportion of their income would be much less as they were somehow in a position to be buying fewer Services. There are so many services are being purchased in the food as well as a basic food stuff itself. All right topics for another program perhaps gentleman. Thank you very much. Will Anthony University of Minnesota agricultural Economist blood wands director of agricultural planning and Affairs for Green Giant company and Bruce hornbacher owner and manager of Hornbacher's Supermarket. Send to my colleague John. It's the in Moorhead. Thank you as well. And also thanks to Farmer Jermaine bull who joined us via tape for this program. We have now some weather information for the region that will pass along at one minute one the forecast for Minnesota increasing cloudiness today with a chance of rain and a few Thunder. Storms in the southwest tonight and tomorrow rain will spread over the state with a few thunderstorms in the South. There's a chance of rain mixed with snow and extreme Northeastern Minnesota. Today's high temperatures will rain from the upper 40s 50s and lows tonight from 32 to 40 above where the Twin Cities increasing fogginess this afternoon. There's a chance of rain and possibly a thundershower by like this afternoon in Minneapolis-Saint Paul rain with a few thunder showers are expected tonight and tomorrow as well the high today in the mid-fifties. The low tonight will be near 40 in the Twin Cities the radar summary from the Twin Cities Office of the National Weather Service indicates light rain showers are now detected over a widespread area in north central Iowa. They are moving Northeast about 20 miles an hour rain showers and Southwestern Minnesota are weak and they're too weak to be detected at last report across the region range of Sky conditions all the way from rain and cloudy to sunny skies 53 in the Twin Cities 47 at Duluth superior. Nine at Rochester 53 at St. Cloud 53 at Fargo-Moorhead 52° at the cross one. Now, this is Minnesota Public Radio a listener supported surface.