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Factors That Determine The Cost of Food

Factors That Determine The Cost of Food. Chad Hart chart@iastate.edu 515-294-9911 ISU Extension ANR Lunch and Learn Bioeconomy Community Conversation II: Food, Feed, and Fuel Ames, Iowa October 10, 2008. U.S. Food Marketing System. Five distinct sectors Agricultural production

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Factors That Determine The Cost of Food

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  1. Factors That Determine The Cost of Food Chad Hart chart@iastate.edu 515-294-9911 ISU Extension ANR Lunch and Learn Bioeconomy Community Conversation II: Food, Feed, and Fuel Ames, Iowa October 10, 2008

  2. U.S. Food Marketing System • Five distinct sectors • Agricultural production • 2 million farms • Food processing and manufacturing • 25,000 food and beverage companies • Wholesale distribution • 33,000 food wholesalers • Retail distribution • 113,000 food retailers • 378,000 foodservice companies • Consumption • 111 million households

  3. U.S. Food Marketing System In 2001, government estimates showed: 23.7 million employed in the food system 12% of the nation’s gross domestic product Food is a major component of our economy Each step in the system adds value and costs

  4. The Food Dollar Source: USDA-ERS

  5. Declining Farm Value in Food In the 1950s, 25% of food was consumed away from home. Today, nearly 50% of food is consumed away from home. Source: USDA-ERS

  6. Farm Value in Individual Foods Farm share of retail price1 Food 1998 1999 2000 (Percent)   Milk, ½ gal. 41 39 34   Orange juice conc., 12 fl. oz. 38 37 33   Corn, 303 can (17 oz.) 23 22 22   Applesauce, 25-oz. jar 14 14 16   Tomatoes, whole, 303 can 7 7 7   Sugar, 1 lb. 32 31 27   Flour, wheat, 5 lbs. 20 18 19   Margarine, 1 lb. 26 17 15   Rice, long grain, 1 lb. 22 19 14   Peanut butter, 1 lb. 26 23 22   Potato chips, regular, 1-lb. bag 8 9 8   Chicken dinner, fried, frozen, 11 oz. 13 13 14   Potatoes, french fried, frozen, 1 lb. 11 11 10   Bread, 1 lb. 5 5 5   Corn flakes, 18-oz. box 4 4 4 1Computed from unrounded farm values. Source: USDA-ERS

  7. Changes in Food Price Indexes 1BLS estimated expenditure shares, December 2007 2Forecasts updated July 21, 2008 Sources: Bureau of Labor Statistics, USDA-ERS

  8. Quick Facts • Farm value is less than 20% of the food dollar. • Costs beyond the farm gate make up more than 80% of the food dollar. • Labor, transportation, energy, advertising, etc. • The farm value in the food dollar has dropped as people seek more food away from home and more processed foods.

  9. Thanks for your time! Any questions?

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