More
and more of what consumers spend for their groceries
has gone to the firms that process, package, and
distribute agricultural commodities. The farm
share of retail food prices has likewise been
shrinking. For example, farmers earned 33 percent
of what consumers spent for fresh fruit at retail
foodstores in 1982, but just 20 percent in 2004.
Likewise, the share for fresh vegetables shrank
from 34 to 19 percent. However, new research finds
that the more recent estimates understate the
share of the produce dollar going to the farmer.
ERS’s market basket data
series measures the spread (or difference) between
the price paid by consumers for a mix or basket
of foods purchased in foodstores and the revenues
earned by farmers for supplying the commodities
in those foods. ERS estimates spreads for nine
commodity groups: fresh fruit, fresh vegetables,
dairy foods, meat products, poultry, eggs, fats
and oils, processed fruit and vegetables, and
bakery/cereal products. The series aims to inform
both policymakers and the agricultural community
about the cost of marketing commodities and how
these costs compare with what farmers themselves
earn. The farm share does not measure farm income
or profitability.
Each consumer commodity basket
strives to represent the food items and quantities
bought by a typical American household in a year.
The corresponding farm basket contains the amounts
of agricultural commodities that produce the contents
of the consumer basket, taking into account losses
due to trimming at processing facilities and spoilage
at retail stores. Thus, the consumer basket for
fresh vegetables contains 20.2 pounds of carrots,
while the farm basket contains 20.8 pounds.
The contents of the consumer
and farm baskets are based on 1982-84 data on
American households’ grocery store purchases.
Applying measures of retail price inflation supplied
by the Bureau of Labor Statistics and yearly
farm prices allows ERS to update values each
year. The total farmgate value of all commodities
used to produce the consumer basket for fresh
vegetables in 2004 was $48.77, 19 percent of
the estimated price of $256 for the consumer
basket.
U.S. food shopping habits have
changed since 1982, and fresh fruit and fresh
vegetable shopping are no exception. Between
1987 and 1997, the average supermarket produce
department expanded from 4,817 to 5,140 square
feet, and the number of items stocked grew from
173 to 335 over the same period. ERS’s
food availability data, which include both the
at-home and away-from-home markets, show dramatic
changes in the quantities of some fresh fruit
and fresh vegetables available for consumption
since 1982. Notable increases have occurred in
the per capita supply of bell peppers (up 3.9
pounds) and broccoli (up 3.5 pounds). Until 1985,
the supply of romaine lettuce was too small to
track, but totaled 11.2 pounds per person in
2003.
ERS is currently reviewing each
of the nine commodity groups in its market basket
series, and used purchase data on about 7,000
households in both 1999 and 2003 to compile new
consumer baskets for fresh fruit and fresh vegetables.
Updated farm baskets were also calculated to
correspond with these new consumer baskets.
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Based on the new farm baskets,
farm revenues accounted for 26.6 percent of consumer
spending for fresh fruit at retail foodstores
in 2004 and 23.5 percent for fresh vegetables.
These estimates are higher than estimates provided
by the current series partly because the new
baskets contain more fruit and vegetables with
higher farm values. For example, the new basket
for fresh vegetables adds asparagus (with a relatively
high farm value of $1.22/pound), bell peppers
($0.34), broccoli ($0.33), mushrooms ($1.14),
and romaine lettuce ($0.19). By contrast, celery
($0.15), corn on the cob ($0.21), iceberg lettuce
($0.17), and onions ($0.11) are less represented
in the updated basket.
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