Feast Your Eyes: 16 Cents of Each Dollar You Spend on Food Goes to the Farm. What Happens to the Rest?
This month, the USDA's Economic Research Service issued a new report in its Food Dollar series, which "measures annual expenditures on domestically produced food by individuals living in the United States and provides a detailed answer to the question 'For what do our food dollars pay?'"
The report slices the food dollar three different ways, to shed light on "different aspects of evolving supply chain relationships." The most straightforward data set, pictured above, shows that in typical dollar’s worth of US-produced food, 84.2 cents pays for food marketing, while just 15.8 cents is spent on the raw farm commodities themselves.
"Food marketing," in the USDA's definition, is not limited to advertising: It refers to the entire system that links farms to consumers, including transportation, processing, and distribution. In other words, the infographic above means that we spend five times as much on getting our food from farm to table as we do on actually growing it.
The USDA also breaks down the percentage of each food dollar that goes to each distinct industry group, including packaging, energy, legal, and advertising. The farm and agribusiness slice of the pie decreases still further here, as some of their share from the farm/marketing split pays for transportation, insurance, and other services. Another interesting finding from the report is that the amount of each food dollar spent on energy has increased by 75 percent since 1998.
The third and final analysis shows how each food dollar is split in terms of U.S. worker salaries and benefits, rents to food industry property owners, taxes, and imports. The report's authors note two trends in their data: The salary and benefit share has "steadily declined from 55 cents to 51 cents between 2001 and 2008," and "imported ingredients, both food and nonfood, accounted for a growing share of the food dollar, climbing from less than 5 cents in 1993 to nearly 8 cents in 2008."
Overall, the USDA's report noted that the farm share component of food dollar expenditures has decreased steadily over the past twenty years, from just over 18 cents in the early nineties when this analysis began. Digging deeper into the numbers, the report's authors conclude that this decrease is due to a rise in eating out. The more we spend on paying others to cook dinner and clean up behind us, the smaller the proportion of our total food dollar that goes to the farmer:
These results present a compelling case that the growing costs and expenditures of eating out are behind the downward trend in the farm share value over the study period. Under this interpretation of the data, the added costs of food preparation and cleanup services in foodservice establishments are driving up the marketing share and driving down the farm share.
And in their conclusion, the authors predict that this is a trend that their projections indicate will likely continue:
Farm commodity prices are projected to initially lose ground for a few years on retail food prices and then to keep pace through most of the next decade. Food-away expenditures are forecast to outpace at-home expenditures over this period. Both sets of projections point to a falling farm share measure.
You can download the executive summary, the full report, and all the data and equations online. It's a lot to wade through, but well worth it—following the flow of dollars through our food system is one of the clearest and most thought-provoking ways of understanding the vast, distributed infrastructure that we rely on to feed us in the 21st century.
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