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Infographic: Where Does a Food Dollar Go?

March 2nd, 2011 Leave a comment Go to comments
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The USDA Economic Research Service recently published a report that helps shed the light on the cost of food. Take a look at the interesting statistic above. For every dollar we spend on food, less than 16 cents go to farmers. The rest is spent on marketing.

This shouldn’t surprise you. Authors get pennies for every dollar spent on their books. The bulk goes to the bookstores (50%) and to publishers (25-40%). And in the music industry, numbers are similar.

The working man / woman creating the actual goods is far from the end consumer. Every stop along the supply chain needs to make a living too.

But here is the good news for all the foodies out there who complain about the high cost of organic grass fed beef or fresh produce – find a local farm and buy directly from the source. between you and the farmer there’s 84 cents to split. That’s a bargain for both sides.

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  • Caroline

    Is this true, however, about fruits and vegetables, which do not have marketing? These are the items we should be buying anyway and the farmer might get a larger cut from the sales of these…

  • http://www.cspiscam.com/background.cfm OriginalBuddha

    Nice job on the misleading graphic there. If you download all of them you’ll see in Figure 1 they give the entire breakdown from 2006.

    19¢ – Farm value
    38.5¢ – Labor
    8¢ – Packaging
    4¢ – Transportation
    3.5¢ – Energy
    4.5¢ – Profits
    4¢ – Advertising
    3.5¢ – Depreciation
    4¢ – Rent
    2.5¢ – Interest
    1.5¢ – Repairs
    3.5¢ – Business taxes
    3.5¢ – Other costs

    Figure 2 which you’re using uses a new method which just calls everything else “marketing share”.

    Figure 3 shows commodity prices from 1993-2008. There’s a steady rise and nothing out of the ordinary there.

    Figure 4 gives a bigger break down for value added shares. They are farm value, food processing, packaging, transportation, retail trade, food services, energy, finance and insurance, advertising, accounting. This is probably the graphic you should be using.

    Figure 5 shows where the money goes to. Imports, taxes, property income, salary & benefits. More than have that dollar is going to salary & benefits.

    Figure 6 gives the number of establishments per capita. How did you miss this one and not? Full and limited service restaurants are on the rise. Supermarkets are on the decline.

    Figure 7 shows expenditure projections. What’s interesting here is that by 2018 more money will be spent on food away from home than at home.

    Good job on trying to promote your agenda.

    • WilliamB

      I, too, found it interesting that:
      - the people who pick and package the food do it for free;
      - the package supplier donates the packaging for free;
      - the truckers and train companies move the food for free;
      - the oil/gas/coal/electric companies supply fuel for free along the production, distribution, and sales chain;
      - the stores shelve and display the food for free;
      - food processors & grocery stores do not pay tax;
      - food processors & grocery stores do not pay their workers;
      - food processors & grocery never earn a profit;
      - food processors & grocery stores have no operating costs (rent, wages, repair, IT support, etc); and that
      - construction companies build the stores for free.

  • http://www.foodieformerlyfat.com Foodie, Formerly Fat

    I think the point here isn’t how those other 84 cents are spent it’s simply that it isn’t going to the farmer who produced the food. While some of those other costs listed may still be in place, many of them would still be eliminated by buying directly from a farm or being involved in a farming co-op.

    Yes, there is value (monetary and other) to having a system in place to bring the goods to supermarkets. But for many people (a growing number I hope) it’s worth it to divert those funds to the farmer directly when they are providing a product and doing so in a manner I wish to support. People expect the goods at a farmer’s market to be cheaper because they are cutting out the middleman. They often aren’t. They are often the same price as in the mega-mart. But I’m willing to spend the same amount at the farmer’s market so that I can have the person who grew and harvested the food sell it to me directly.

    Besides, no one needs to use advertising to sell me a gorgeous peach at the farmers market the way they have to use advertising to sell some processed junk food from the center isles of the grocery store. The farmer (and I) can keep that money, thank you very much.

  • Sue

    Keep in mind that “marketing” is a lot more than just advertising. “Marketing” includes everything it takes to get a product from production to sale, and often times includes plenty of pre-production work, as well.

    So, marketing includes:

    Research to determine target audience for product
    Development of product to suit target audience’s wants/needs
    Advertising to develop demand for product
    Media/public communications to enhance company image with target audience, regulators and general public
    Development of distribution channels to get product from farm/factory to warehouse to market
    Point-of-sale work to increase demand for product
    Incentives for those along the distribution channels and for end customers to increase sales.

    I probably missed a few steps, but hopefully you get the point.

    The closer you get to the producer when you purchase foodstuffs, the less money is necessarily spent on getting products to market. The farmer/producer can charge a little more, the consumer can pay a little less, the food is healthier, fresher, less processed, less “marketed.” Not a bad gig, as I see it.

  • Crazy Eddie

    Yes, that certainly was interesting. Thank you so much for sharing that. It sure made me think. Instead of complaining, people need to start working and networking together to cut some of the middlemen out. I garden to help cut my food bill down. Gardeners need to work together. And more people need to garden. The food is not only cheaper but fresher and healthier. Just my opinion.

    Vegan Joy

  • http://ithinkitneedsmoreturbinado.blogspot.com/ SL

    Love it. I want to see the match up of actual cost per acre of crop…conventional VS organic. You remember when someone did that to the cost of running a school system (public VS private) and the private schools ran at a lower cost per student per year. I bet organics is just the same. smh…

  • Joe Sherbert

    so, it turns out that Grandpa, with only a 4th grade education, was pretty intelligent after all.

  • Joe Sherbert

    always had his own little vegetable garden