Wednesday, March 2, 2011

Policy Point Wednesday - Where do your food dollars go?

The United States Department of Agriculture's Economic Research Service offers an annual report entitled The Food Dollar Series: if you follow the link, you can get specifics, download an Excel file of the whole report, or hover a mouse over the graphics to reveal more. The reports break down each industry's share of each food dollar spent in the US . For instance, the graphic above shows how much (or, more accurately, how little) of your money goes to farmers for for raw food commodities. "Marketing share" in this case means any other industry that gets part of your food dollar, e.g. processors, distributors, wholesalers, retailers, etc. - and all their associated costs.

Though the farm share is incredibly small, and had been declining steadily since the initial report, in the past two years there was a slight bump that brought the farm share nearly back to 2000 dollars.  Unfortunately, this bump from about 12 to about 14 cents is still well behind the 17-cent marker where this series began.  (You can also think of these numbers as a percentage of the entire market share.)

The ERS also shows a more detailed breakdown:

You will note that the largest portions of our food dollar goes to two things - first, Food Services, which takes up about one-third of every food dollar we spend.  Food Services includes "all eating, drinking, and related establishments" - in other words, places that serve ready-to-eat foods, like restaurants. Second is food processing, which includes any manufacturing business in the food and drink industry. It's also interesting to see how small a share of our dollars goes to energy, packaging, transportation, and advertising (included with legal fees in "other") - though these issues receive a lot of attention in the media.  

Put most simply, it seems that Americans wanting to make the most out of their food dollars could save a considerable amount if they ate out less, and cooked at home using the least-processed foods possible.

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