Food Dollar Series: Documentation

Food Dollar Series Background Quick Facts Glossary Documentation Why Replace the Marketing Bill Series?

Overview

A food dollar represents a $1 expenditure on domestically produced food by U.S. consumers. The food dollar is allocated to expenditures on each of the various food commodities sold in proportions that represent their share of annual sales in the U.S. market. (See the Food CPI and Expenditures briefing room for information on total U.S. food expenditures and the U.S. Agricultural Trade briefing room for information on the import share of domestic food expenditures).

The new and expanded food dollar series divides the food dollar into a set of input component values. There are three primary series—the marketing bill series, the industry group series, and the primary factor series. For each primary food dollar series, the combined input component values are equal to the $1 output market value. The three series represent distinct perspectives on the sources of market value for the combined annual food dollar expenditures.

Marketing Bill Series

The marketing bill series is based on sales proceeds. Proceeds from each food dollar expenditure are divided into two sub-components of market value:

• Farm share measures proceeds of farm commodity sales tied to a food dollar expenditure and sold to non-farm establishments. It does not include farm commodity sales that are incorporated into other commodities and resold to a domestic farm industry—this eliminates double counting.
• Marketing bill is the market value added to farm commodities that are embodied in a food dollar expenditure, measured as $1 minus the farm share.

For calendar year 2010, the farm share was 14.1 cents of each food dollar expenditure, and the marketing bill was 85.9 cents, accounting for the remainder of the food dollar.

Value Added Component Series—For establishments contributing to the U.S. food supply, value added for an establishment equals the proceeds from the sale of outputs minus the outlays for commodities purchased from other establishments. The sum of value added by all establishments that contribute to total food dollar purchases equals $1. The industry group and primary factor component series are based on this value added concept.

Industry Group Series

Industry Groups are establishments grouped together by type of product or service provided. Ten industry groupings are examined based on the importance of their contributions to the market value of food. For sub-contracting establishments—those not classified into one of the 10 industry groups—their value-added contributions are allocated across the 10 industry groups in proportion to the value of goods or services provided to each industry group. The 10 industry groups are:

• Farm and Agribusiness—all establishments classified within the agriculture, forestry, fishing, and hunting industry, and all subcontracting establishments.



• Food Processing—all establishments classified within the food and beverage manufacturing industries, and all subcontracting establishments.



• Packaging—all establishments classified within the packaging, container, and print manufacturing industries, and all subcontracting establishments.



• Transportation—all establishments classified within the freight services industries, and all subcontracting establishments.



• Retail Trade—all food retailing and related establishments, and all subcontracting establishments.



• Foodservices—all eating, drinking, and related establishments, and all subcontracting establishments.



• Energy—oil and coal mining, gas and electric utilities, refineries, and related establishments, and all subcontracting establishments.



• Finance and Insurance—all financial services and insurance carrier establishments, and all subcontracting establishments.



• Advertising—all advertising services and related establishments, and all subcontracting establishments.



• Legal and Accounting—establishments providing legal, accounting, and bookkeeping services, and all subcontracting establishments.

For calendar year 2010, farm and agribusiness value added was 10.1 cents of each food dollar expenditure, implying that 4 cents from farm commodity sales (from the 14.1-cent farm share) was used to purchase products from the other industry groups. The 2010 industry group value-added food dollar also indicates that nearly half of the food dollar value covers the services from food retailers (12.8 cents) and foodservice establishments (34 cents). The use of energy throughout the food supply chain accounted for 4.8 cents of every 2010 food dollar expenditure. Advertising, legal, accounting, and bookkeeping accounted for 4.1 cents of a food dollar expenditure.

Primary Factor Component Series

Primary factors are assets employed by establishments to use or transform products purchased from other establishments (intermediate inputs) in order to produce and market a different product. These assets are the primary factors of production, used to add market value to the purchased intermediate products. In the food dollar accounts, value added is recorded as income to primary factors as follows:

• Domestic hired labor is allocated salary and benefits for services on behalf of a domestic establishment that directs sales towards fulfilling the supply of food to the U.S. market.



• Property income—machinery, equipment, structures, natural resources, product inventory, and other tangible or intangible assets—is allocated compensation to various owners for services on behalf of a domestic establishment that directs sales to the U.S. food supply.



• Output taxes—excise, sales, property, and severance taxes (less subsidies), customs duties, and non-tax fees—are levied by Federal, State, and local governments independently of establishment dispersals to primary factor owners. Taxes that are tied to outlays for domestic labor and capital, such as income based taxes, are not reported separately but are included in the primary domestic factor returns.



• Imports—international assets are compensated for their services on behalf of non-domestic establishments whose products are imported and are directed to supplying U.S.-produced food to the U.S. market. Because these services cannot be traced to their primary factor sources, their values are measured in the form of the products imported and their value added is assigned to industry groups with which they are associated.

For calendar year 2010, the primary factor series indicates that half of every food dollar expenditure goes to the salary and benefits of domestic workers, about a third is dispensed as property income, and the remainder is split about equally between U.S. government (output taxes) and international assets (imports).

Underlying Detailed Value Added Data

Cross-tabulated statistics of primary factor value added by industry group are displayed in table form because these data provide more detail than can effectively be displayed in a food dollar visual. The underlying detailed value-added data for 2010 are presented below: