The Cost of Food

The Cost of Food

by Nate Furler, marketing specialist

According to the Bureau of Labor and Statistics, the average annual income for consumer units (households) in the United States measures roughly $63,000.  Of this figure, nearly 11% is spent on food – both food-at-home and food-away-from-home combined.  However, the three largest populated income brackets, as deemed by this report, are $50-70K, followed by $20-30K and then $80-100K – from largest to smallest proportionately.  The percentage of household income spent on food constitutes 10.9%, 17.7% and 9.4% respectively.  This goes to show that simply blanketing the American population with an 11% food cost only paints a pretty illusion.  When looking closely at the numbers for the different income brackets, people within the United States are devoting anywhere from nearly 38% to a minimal 5.6% of their income on food.

When looking at other country’s spending on food as analyzed in the United States Department of Agriculture (USDA) Food CPI (Consumer Price Index) and Expenditures 2009 Table, it is clear that the average US expenditure on food ranks the smallest of any country in the world.  This particular table looks at household consumption spent on food, alcoholic beverages and tobacco that were consumed at home.  It conveniently separates out food from alcohol and tobacco to give a truly food-related figure.

When looking at the United States, the percentage of income spent on food consumed at-home is 6.2 percent.  (Two categories exist for food expenditures – food at-home and food away-from-home.  This particular table only looks at food- at-home percentages) . Topping the list for least amount spent on food at-home, after the U.S., are Ireland (7.2%), Singapore (8%), United Arab Emirates (8.7%) and the United Kingdom (8.8%).  At the opposite end of the list, spending the greatest percentage on food at-home, are countries such as Azerbaijan (46.9%), Pakistan (45.5%) and Kenya (44.9%).  As you can see, these countries spend nearly half of their income on food eaten at home.  As can be read in the excerpt following, the rising cost of food and its potential scarcity due to weather conditions, political unrest, and/or re-direction towards bio-fuels holds much uncertainty for the greater part of the globe.

One thing is almost certain.  Those communities with a strong and vibrant local economy, abundant with an all-encompassing and sustainable marketplace will be well served in times of uncertainty.  It is vital to build a community that is well insulated to weather any coming storm, but yet one that is not isolated and that is clearly involved in matters of global proportion.

Thinking beyond our borders, the following excerpt is taken from an article out of Foreign Policy titled “The New Geopolitics of Food” by Lester R. Brown.

“In the United States, when world wheat prices rise by 75 percent, as they have over the last year, it means the difference between a $2 loaf of bread and a loaf costing maybe $2.10. If, however, you live in New Delhi, those skyrocketing costs really matter: a doubling in the world price of wheat actually means that the wheat you carry home from the market to hand-grind into flour for chapattis costs twice as much. And the same is true with rice. If the world price of rice doubles, so does the price of rice in your neighborhood market in Jakarta. And so does the cost of the bowl of boiled rice on an Indonesian family’s dinner table.

Welcome to the new food economics of 2011: Prices are climbing, but the impact is not at all being felt equally. For Americans, who spend less than one-tenth of their income in the supermarket, the soaring food prices we’ve seen so far this year are an annoyance not a calamity. But for the planet’s poorest 2 billion people, who spend 50 to 70 percent of their income on food, these soaring prices may mean going from two meals a day to one. Those who are barely hanging on to the lower rungs of the global economic ladder risk losing their grip entirely. This can contribute — and it has — to revolutions and upheaval.

At issue now is whether the world can go beyond focusing on the symptoms of the deteriorating food situation and instead attack the underlying causes. If we cannot produce higher crop yields with less water and conserve fertile soils, many agricultural areas will cease to be viable. And this goes far beyond farmers. If we cannot move at wartime speed to stabilize the climate, we may not be able to avoid runaway food prices. If we cannot accelerate the shift to smaller families and stabilize the world population sooner rather than later, the ranks of the hungry will almost certainly continue to expand. The time to act is now — before the food crisis of 2011 becomes the new normal.”

(Excerpted and reproduced with permission from Foreign Policy #186 (May/June 2011) www.foreignpolicy.com ©The Slate Group LLC.)