Monday, November 27, 2006

Food, Farmers and Marketing

What does it cost Americans to eat what they eat?

Total food expenditures, which includes imports, fishery products, and food originating on farms, were $844.2 billion in 2001, an increase of 3.8 percent over those in 2000. Average food expenditures came to $2,964 per capita, 2.8 percent above the 2000 average. Away-from-home meals and snacks captured 47 percent of the U.S. food dollar in 2001, up from 45 percent in 1991 and 40 percent in 1981.

How Much of the Cost of Food Services and Distribution Goes to Farmers?

The estimated bill for marketing domestic farm foods–which does not include imported foods–was $498 billion in 1999. This amount covered all charges for transporting, processing, and distributing foods that originated on U.S. farms. It represented 80 percent of the $618 billionconsumers spent for these foods. The remaining 20 percent, or $121 billion, represents the gross return paid to farmers.

The cost of marketing farm foods has increased considerably over the years, mainly because of rising costs of labor, transportation, food packaging materials, and other inputs used in marketing, and also because of the growing volume of food and the increase in services provided with the food.

In 1990, the cost of marketing farm foods amounted to $343 billion. In the decade after that, the cost of marketing rose about 57 percent. In 2000, the marketing bill rose 6.9 percent. These rising costs have been the principal factor affecting the rise in consumer food expenditures. From 1990 to 2000, consumer expenditures for farm foods rose $211 billion. Roughly 92 percent of this increase resulted from an increase in the marketing bill.

The cost of labor is the biggest part of the total food marketing bill, accounting for nearly half of all marketing costs. Labor used by assemblers, manufacturers, wholesalers, retailers, and eating places cost $252 billion in 2000. This was 4.7 percent higher than in 1999 and 64 percent more than in 1990. The total number of food marketing workers in 2000 was about 14.3 million, about 17 percent more than in 1990. About 80 percent of the growth in food industry employment occurred in public eating places. A wide variety of other costs comprise the balance of the marketing bill. These costs include packaging, transportation, energy, advertising, business taxes, net interest, depreciation, rent, and repairs. Their relative proportions are illustrated in the accompanying dollar chart.

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