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October 2010, Volume 16, Number 4

Food Spending: 2009

The US Bureau of Labor Statistics' Consumer Expenditure Survey reported 121 million "consumer units" in 2009 with an average of 2.5 persons, 1.3 earners and two vehicles; 66 percent were homeowners, and the average age of the reference person was 49. Average consumer unit income before taxes was $62,900 and household expenditures averaged $49,100; both income and expenditures were down slightly from 2008. http://www.bls.gov/cex)

These expenditures included $6,400 for food (13 percent of expenditures). Food spending was split about 60-40, including 60 percent or $3,800 for food eaten at home ($73 a week) and 40 percent or $2,600 for food bought away from home ($50 a week). The cost of food away from home largely reflects convenience, atmosphere and other factors not related to food costs.

To put food spending in perspective, other significant expenditures were housing and utilities $16,900; transportation $7,700; health care $3,100; and entertainment, $2,700.

The largest food-at-home expenditures were for meat and poultry, an average $841 or $16 a week. Expenditures on cereal and bakery products, $567, exceeded the $406 spent on dairy products.

Expenditures on fresh fruits ($220) and fresh vegetables ($209) totaled $429, or $8.25 a week (consumer units spent an additional $118 on processed fruits and $110 on processed vegetables). The average consumer unit spent more on alcoholic beverages, $435, than on fresh fruits and vegetables.

Farmers get a small share of the retail food dollar, an average 19 percent for all commodities. In 2006, farmers received an average 30 percent of the retail price of fresh fruits and 25 percent of the retail price of fresh vegetables, so consumer expenditures of $429 on fresh produce meant $118 to the farmer (0.3 x 220 = $66 + 0.25 x 209 = $52). Farm labor costs are typically less than a third of farm revenue for fresh fruits and vegetables, meaning that farm worker wages and benefits for fresh fruits and vegetables cost the average consumer unit $38 a year. (www.ers.usda.gov/Briefing/FoodMarketingSystem/pricespreads.htm)

Even though strawberries are picked directly into the containers in which they are sold, and iceberg lettuce gets its film wrapper in the field, farmers and farm workers get a small share of the retail spending on fresh produce. Consumers who pay $1 for a pound of apples are giving 30 cents to the farmer and 10 cents to the farm worker; those spending $2 for a head of lettuce are giving 50 cents to the farmer and 16 cents to the farm worker.

If the influx of immigrant workers were slowed or stopped and farm wages rose, what would happen to expenditures on fresh fruits and vegetables?

In 1966, the United Farm Workers union won a 40 percent wage increase for some table grape harvesters, largely because Bracero workers were not available. The average earnings of US field workers were $10.07 an hour in 2009, according to a USDA survey of farm employers; a 40 percent increase would raise average hourly earnings to $14.10. If this wage increase were passed on to consumers, the 10 cent farm labor cost of a pound of apples would rise to 14 cents, and the retail price would rise to $1.04.

For a typical household, a 40 percent increase in farm labor costs translates into a 3.6 percent increase in retail prices (0.275 farm share of retail prices x 0.33 farm labor share of farm revenue = nine percent. If farm labor costs rise 40 percent, 0.4 x 9 = 3.6 percent). If farm wages rose 40 percent, and this wage increase were passed on to consumers, average spending on fresh fruits and vegetables would rise about $15 a year (3.6 percent x $429), the cost of two movie tickets. However, for a typical seasonal farm worker, a 40 percent wage increase could raise earnings from $10,000 for 1,000 hours of work to $14,000, above the federal poverty line of $10,830 for an individual in 2008.