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While personal food expenditures rose 3.7 percent, disposable personal income increased 5.5 percent from 2000 to 2001. U.S. consumers in 2001 spent 10.0 per- cent of their disposable personal income (after taxes) on food. This figure com- pares with 11.6 percent in 1991, 13.0 per- cent in 1981, and 13.4 percent in 1971.

In the United States, retail food prices (including meals served in restaurants and food purchased at grocery stores) rose 27.0 percent over the last 10 years (1991-2001). Prices of food eaten away from home increased 26.1 percent, while retail food store prices increased 27.7 percent. Prices of all goods and services in the Consumer Price Index climbed 30.0 percent over the same 10 years.

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

The estimated bill for marketing domes- tic 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 billion consumers spent for these foods. The re- maining 20 percent, or $121 billion, rep- resents 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 materi- als, and other inputs used in marketing, and also because of the growing volume of food and the increase in services pro- vided 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 mar- keting bill rose 6.9 percent. These rising costs have been the principal factor af- fecting the rise in consumer food expen- ditures. From 1990 to 2000, consumer expenditures for farm foods rose $211 billion. Roughly 92 percent of this in- crease 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. La- bor 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 per-

cent more than in 1990. The total num- ber 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 bal- ance of the marketing bill. These costs include packaging, transportation, ener- gy, advertising, business taxes, net inter- est, depreciation, rent, and repairs. Their relative proportions are illustrated in the accompanying dollar chart.

Figure 2-2

What a dollar spent on food paid for in 2000




Farm value

Profiling Food Consumption in America | 21


Transportation Energy Profits

Advertising Depreciation Rent

Interest (net) Repairs Business Taxes

Other costs

    • 3.5


    • 4.5


3.5¢ 2.5¢ 1.5¢ 3.5¢

Marketing bill

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