by Marion Nestle
Feb 26 2011

USDA recalculates distribution of food dollar

USDA has changed the way it reports the country’s annual expenditures on the food system.  It has just released the Economic Research Service’s new food dollar report. As the report explains, it is designed to answer the question “For what do our food dollars pay?”

The USDA has a nifty way of presenting this information.  The first illustration identifies the distribution of the U.S. food dollar between farm and marketing shares.  The farm share is what goes to the farmer.  The marketing share is everything else that happens to a food between harvest and consumption.

What surprised me about this was the 15.8% farm share.  For those of you who keep track of such things, it was 19% in 2006.

But the USDA changed the methods for computing this figure.  Using the new methods, 15.8% is a 4% increase since 2006.  However this is calculated, less than 20 cents of a dollar spent on food is for the food itself.

The second illustration explains the distribution of the food dollar among ten industry groups involved in the supply chain.

Looking at the actual data series this way, farm and agribusiness accounts for only 11.6% of the dollar.  The big sectors are food processing (18.6%) and food service (33.7%).

From a health and sustainability standpoint, isn’t there something wrong with this picture?

  • juan

    Great post. Wanted to look at data, but the links aren’t working! 🙂

  • Anthro

    I’m not surprised–even my mother used to tell me that it was the “middle man” who was getting all the money–not the farmer. But it is nice to see it so graphically displayed.

    What to do? I think I’ll be trying even harder to go straight to the source this year, but how do we get more people to become aware of this? I almost always go pick my strawberries and make jam, but my daughter has never done this, and younger friends of mine are amazed–amazed, I tell you–that I do such a “quaint” thing! I pick apples, too (some from my own tree–still small) and make applesauce–have you seen the price of a jar of applesauce?

    Mostly I eat the apples just as they come off the tree, but applesauce is nice to use in place of oil in baking. It used to be the only apples we had in the winter, but now, of course, they keep the apples in chilled warehouses for a year or more.

    p.s. I am not 100 years old.

  • Cynthia

    What exactly is “food services”?

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  • mb

    Is that referring to produce (i.e., just apples, oranges, etc) or “raw food material” (i.e., as ingredients combined in other foods we buy). If it’s the latter, that’s actually pretty good.

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  • This seems sort of vague. How does the farm business compare with other commodities? Does this take into account each sectors cost of doing business and what in the end is average profit per dollar for each sector? I guess I am asking because I think it would give a clearer picture. I live in the middle of farm country and I would love to see my farm neighbors making more.

  • Funny… the 33% for foodservices is right on point with the percentage of food costs a foodservice establishment needs to aim for in order to actually make a profit. If this seems high, it’s actually not in comparison to the expenses a foodservice incurs to actually put the food in the hands of the diner.
    It does go to show, however, that there are problems with the overall picture. How do we level this off? I do know that if a typical restaurant with typical expenses runs higher than 33% food cost, it will not sustain a business for long. Maybe this is why many chefs are attracted to more casual style operations that can keep costs lower by eliminating excess frills.

  • Fudd

    I don’t understand what the problem is. What arbitrary percentages would be better?

  • Emma

    I’m in the same boat, Anthro! I’m also not 100 (or even half that, for that matter), and people think my gardening & canning are either quaint or freakishly weird. I’ve planted some fruit trees in my yard, so at some point I’ll be looking for ways to preserve that bounty, too, and I’ll bet that that will cause people to give me presents decorated with chicken motifs….

  • Sarah

    And still, in the NYC greenmarkets and most of the CSAs in the area, prices are far above what one pays in a supermarket. Even the Union Square Whole Foods is equivalent or cheaper than the greenmarket across the street. I’d love to cut out the middlemen, but cannot afford: $5 for a tiny bag of salad greens, $8 for a loaf of bread, $7 for half a gallon of milk, $30 for a piece of brisket, a chicken that costs $20, etc.

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  • This is exactly why we should support local agriculture and grow some of our own food.

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  • Great resource you have for teaching the people about getting back to our basics

  • A more parsed farmers share

    NFU does a good job keeping up with the farmers share on various products

  • farmstr

    Agreed Sarah. It is too expensive for most – facilitating direct sales means even with much lower prices to consumers, farmers STILL make significantly more than when they go through multi-layered sales channels. We recently had organic local pears on sale for $1 LB and organic non-GMO corn for $ .25 an ear). We are big fans of lowering prices for customers while increasing margins for small farmers.

  • farmstr

    Anthro: I agree it is amazing how quickly we lost food preservation and shaking hands with farmers. People are away, food bloggers and media are pushing hard to re-educate and an online marketplace like farmstr gives you a place to search for local farms and local farm food. It is just as important for farmers – they need access through direct sales channels (to people like you and me) in order to increase margins and thrive. Keep up the good work and by all means: keep picking berries and apples!!

  • farmstr

    Agreed – and exactly why we are launching to help local farmers sell direct to consumers – so they can significantly improve their margins and turn struggle to success.

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