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January 2006, Volume 12, Number 1

How we Eat: 2004

According to the US Bureau of Labor Statistic's Consumer Expenditure Survey for 2004, there were 116 million "consumer units," with an average of 2.5 persons, 1.3 earners and 1.9 vehicles; 68 percent were homeowners, and the average age of the reference person was 48. Average consumer unit income before taxes was $54, 500 and expenditures were $43,400 http://www.bls.gov/cex).

These household expenditures included $5,800 for food (13 percent), and food spending was split 59-41 percent, included $3,300 for food eaten at home (eight percent, or $63 a week) and $2,400 for food bought away from home. To put food spending in perspective, other significant expenditures were housing and utilities, $13,900; transportation, $7,800; health care, $2,600; apparel, $1,800; entertainment, $2,200; cash contributions, $1,400; and tobacco products, $290.

The largest food-at-home expenditures were for meat and poultry, $880, and nonalcoholic beverages, $290, and milk and cream was another $144. Expenditures on fresh fruits ($187) and fresh vegetables ($183) totaled $370, or $7 a week (processed fruits were an additional $110 and processed vegetables $82). The average household spent more on alcoholic beverages, $460, than on fresh fruits and vegetables, $370.

Even though strawberries are picked directly into the containers in which they are sold, and iceberg lettuce gets its film wrapper in the field, in 2000 farmers received an average 16 percent of the retail price of fresh fruits and 19 percent of the retail price of fresh vegetables, so $370 from the consumer means $65 to the farmer (0.16 x 187 = $30 + 0.19 x 175 = $35). This means that consumers who pay $1 for a pound of apples, or $1 for a head of lettuce, are giving 16 to 19 cents to the farmer and 5 to 6 cents to the farm worker. http://www.ers.usda.gov/Briefing/FoodPriceSpreads/spreads/)

Fresh fruit and vegetable producers do not pay all of this $65 to farm workers. Farm labor costs are typically a third or less of farmer revenue, meaning that farm worker wages and benefits represent about $22 per household a year. If farm wages were zero, the typical consumer unit would save $22 a year.

What would happen if the influx of immigrant workers were slowed, farm wages rose, and the increase in farm labor costs were passed through to consumers? In 1966, the fledgling United Farm Workers union won a 40 percent wage increase for table grape harvesters, largely because Bracero workers were not available. Average farm-worker earnings were $8.83 an hour for US field and livestock workers in 2005, according to a USDA survey of farm employers, and a 40 percent increase would raise them by $3.53 to $12.35. If this wage increase were passed fully to consumers, the 5 to 6 cent farm labor cost of a pound of apples or a head of lettuce would rise to 7 to 9 cents, and the retail price would rise by 2 to 3 cents.

For a typical household, a 40 percent increase in farm labor costs translates into a two to three percent increase in retail prices (0.175 x 0.33 = 6 percent, farm labor costs rise 40 percent, and 0.4 x 6 = 2.4 percent), so total spending on fruits and vegetables would rise by $9, from $370 a year to $379 a year. However, for a typical seasonal farm worker, earnings could rise from $8,800 for 1,000 hours of work to $12,350, or from below the federal poverty line for an individual, $9,570, to above it.

Farm wage increases in the past sometimes led to farm productivity improvements and lower rather than higher food prices for consumers.

Obesity. The House in October 2005 approved The Personal Responsibility in Food Consumption Act, which would bar "lawsuits seeking to blame individual food and beverage producers for a person's weight gain, obesity" or related health problems. So far, there has been only one such suit, by two New York City teens against McDonald's in 2003, alleging that McDonald's failed to warn that eating fattening foods can be addictive. After the McDonald's was dismissed, a federal appeals court reinstated it in January 2005.

In response to that suit, 21 states have enacted some version of so-called cheeseburger bills. The House bill would extend a recent trend to shield certain industries from litigation.

Packaged food companies are beginning to market functional foods that promise a host of health benefits, such as Activia, a yogurt that acts against constipation. Marketers are not required to get Food and Drug Administration approval for claims that talk about the body's "normal, healthy structures and functions," only for references to specific diseases or health conditions. Half of all Americans in 2002 suffered from at least one chronic health condition, from hypertension to asthma to heart disease, suggesting a large potential market for functional foods.

The 1990 Nutrition Labeling and Education Act requires FDA approval of health claims on food based on a significant scientific agreement (SSA) standard set by expert panels. Health claims are followed by a letter grade from A-D, with an A signifying general scientific agreement (calcium may reduce the risk of osteoporosis) and D suggesting there is little scientific evidence supporting a claim (phosphatidylserine may reduce the risk of dementia).

FDA has permitted six qualified health claims for conventional foods, including tomatoes and/or tomato sauce and prostate, ovarian, gastric, and pancreatic cancers; green tea and cancer; nuts and heart disease; walnuts and heart disease; omega-3 fatty acids and coronary heart disease, and mono-unsaturated fatty acids from olive oil and coronary heart disease http://www.cfsan.fda.gov/~dms/qhc-sum.html).

Melanie Warner, "Marketing Fortified Food to Those Leery of Drugs," New York Times, December 28, 2005. Molly Selvin, "Cheeseburger Bill Is High on Menu," Washington Post, November 15, 2005.