Food spending up; farm share steady

Americans spent $618.4 billion on food in the last year of the 20th century — more than $2,000 per person, up some 17 percent over the amount spent in 1990.

The (semi) good news is that the farm value share of food expenditures held reasonably constant over the decade of the ’90s. But marketing costs rose rapidly.

Of every dollar spent for food in 1999, according to the latest figures from the USDA's Economic Research Service, the farm value was 20 cents. The rest of the dollar went for marketing-related costs: labor, the largest chunk, at 39 cents, followed by packaging (8 cents), transportation (4 cents), energy (3.5 cents), profits (only 4 cents), advertising (4 cents), etc.

Food marketing costs for the decade of the ’90s rose 45 percent, but farm value, except for a mid-point spike in 1995 and 1996, increased much more slowly.

“The 1995 farm value rose 3.8 percent, a larger percentage increase than the marketing bill,” says economist Howard Elitzak. “In 1996, the farm value grew by $8.4 billion, greater than marketing costs in both absolute dollars and as a percentage, thereby exerting a larger effect on consumer food expenditures than the marketing bill for the first time since 1973. The 1995 and 1996 increases reflected sharp, across-the-board farm price rises.”

The farm value rose at “a considerably smaller clip” than the marketing bill over the past decade, Elitzak says. “That is consistent with the long-term trend.”

Over the years, he notes, marketing costs have persistently tended to rise, shadowing the rate of inflation, whether farm prices rose or fell. “Because marketing costs account for about three-fourths of consumer food expenditures, they can, and often do, override the effect of a reduction in farm prices.”

If these market fundamentals hold, Elitzak says, the trends in farm value and marketing costs of the last decade can be expected to continue into the current decade. “The farm value will probably continue to decline gradually, while the marketing will continue to show a corresponding increase.”

Food continued to be a bargain for the U.S. consumer, taking only 10.4 percent of household disposable personal income in 1999. That represented a decline from the 11.4 percent spent in 1990, according to economist Annette Clouson. The trend toward spending more food dollars away from home continued, showing a 6.3 percent increase in 1999 over 1998.

While Feb. 9 may not have been particularly noteworthy on most folks' calendars, it nonetheless marked the observance of national Food Checkout Day — the date on which the average American has earned enough money to pay his or her family's entire food bill for the entire year.

“It takes 130 days for the average person to pay his federal, state, and local taxes for the year,” notes Tom Steever of the American Farm Bureau Federation. “It only takes 40 days to pay for a year's food — a much better bargain.”

For those who remember “the good old days,” when families produced much of their own food, the reality is, he says, today's numbers represent the better deal. In 1930, Food Checkout Day would've required 91 days of work — more than twice as many as in 1999. “At that time, nearly 25 percent of Americans' disposable income was spent on food.”

The major trend change in U.S. food consumption during the decade of the ’90s was the continuing increase in the percentage of the food dollar spent away from home. By 1999, it had grown to 47.5 percent. This demand for convenience resulted in higher costs for labor and all the other marketing-related costs.

Convenience brought changes in eating patterns. The ascendancy of pizza on America's menu saw cheese consumption skyrocket, while other fast food places made french fries the “vegetable” of choice. Despite revisions of USDA's dietary guidelines, consumption of fat-laden foods proceeds apace and by 1999 26 percent of adult Americans were classified as obese.

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