A Framework for Assessing Effects of the Food System (2015) / Chapter Skim
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5 Social and Economic Effects of the U.S. Food System
5 Social and Economic Effects of the U.S. Food System
Pages 167-230
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From page 167... ...
We focus on three broad classes of social and economic effects: • Levels of income, wealth, and distributional equity; • Broader indicators of quality of life, such as working conditions, job satisfaction, and freedom of choice to pursue taste and lifestyle preferences; and • Associated impacts on worker health and well-being. Affected individuals fall into three groups: (1)
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From page 168... ...
Consideration of whether particular types of social and economic effects are better than others should be guided by the best available information about those effects and by the cultural, political, and ethical views of stakeholders and decision makers. POTENTIAL SOCIAL AND ECONOMIC EFFECTS ON THE FOOD PRODUCTION SECTOR Income, Wealth, and Distributional Equity The food production sector includes farmers, ranchers, fishers, hired workers, their family members, and residents in the communities in which these individuals reside (primarily, but not exclusively, rural or small town)
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. Economic returns and competitiveness in U.S.
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The distribution of net farm income varies widely by farm type and
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FIGURE 5-3 Inflation-adjusted value of gross farm sales, production expenses, and net farm income, 1970-2013.
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a Differences between 2012 estimates and estimates from prior years reflect changes Figure 5-4 in survey methodology and implementation associated with the 2012 Agricultural Resource Management Survey in addition to changes in the economic situation of farm households. Source: USDA, Economic Research Service and National Agricultural Statistics Service, Agricultural Resource Management Survey and U.S.
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As the U.S. food system has evolved, the overall efficiency and relative economic power of each subsector in the food supply chain has shifted (Marion, 1986; Reardon and Timmer, 2012; Sexton, 2000, 2013)
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. Although hired workers are a minority of the overall farm workforce, many farm operators and family members do not work full time on their farms, and hired farm workers are now estimated to contribute nearly 60 percent of total full-time equivalent labor on U.S.
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2,500,000 2,000,000 65 years and Number of Principal Farm Operators over 55 to 64 years 1,500,000 45 to 54 years 35 to 44 years 25 to 34 years 1,000,000 under 25 years 500,000 0 1978 1982 1987 1997 2002 2007 2012 FIGURE 5-5 Age distribution of principal farm operators.
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. Farm Workers Hired farm laborers face particularly difficult working conditions and experience a quality of life that is well below that of most others in the U.S.
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Rural Communities The economic performance and quality of life for farm operators and hired farm workers can be an important contributor for community life
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Patterns of health insurance coverage are changing for most individuals and families in the United States with implementation of the Patient Protection and Affordable Care Act (ACA) .1 Presumably, farm households that lacked access to affordable health insurance are now eligible to obtain coverage through the ACA.
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From page 179... ...
. Farm laborers Migrant and seasonal farm workers are distinct worker populations: most migrant workers are foreign born, typically from Mexico and Central America, and live in temporary housing, whereas seasonal workers are primarily U.S.
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. In addition to low wages, seasonal farm workers and migrant workers rarely have access to important protections such as workers' compensation (NCFH, 2012)
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, the overall incidence of poisoning events was 53.6/100,000 farm workers compared to 1.38/100,000 for non-farm workers. About one-third of the affected workers were pesticide handlers and the rest were farm workers exposed to off-target drift of pesticide applications or exposed to treated plant or animal material.
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These subsectors (see Figure 2-1 in Chapter 2) are the technology and input suppliers, first line handlers and food manufacturers, wholesale/logistic suppliers, retail food stores, and food service establishments.
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41.6 $41,525 40 36.5 35 30.9 30 25 23.0 19.1 20 15.5 15.2 15 13.2 10 5.4 5 2.1 0.5 0.9 0.2 0 Processing Total Food Workers Workers System Workers Waste / Workers Service Workers Farming Employees Employment Recovery Wholesale Input Supply Retailing/ Food Distribution/ FIGURE 5-8 Number of U.S. food industry employees.
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food supply chain. The average incomes of half a million workers in the farm input sector are the third highest in the overall food industry at about $30,000 per year.
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From page 185... ...
Figure 5-9 Given the global nature of many farm input companies, as well as the skills in chemistry and biological systems needed, it seems likely that demand for workers with higher education levels to fill these jobs will grow. Communities Agricultural input industries have historically contributed to the economic health and employment of rural communities, particularly when they are locally owned and managed or at least maintain production and sales operations in local trade centers.
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From page 186... ...
As shown in Figure 2-6 in Chapter 2, food manufacturing adds about 16 percent of all value added in the food supply chain, the second highest amount after the food service sector. In 2011, processing and manufacturing of meat products composed the largest part of that value added by food manufacturers (17 percent)
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A recent survey of 2,456 food scientists and technologists, 66 percent of whom were employed in the food industry, shows a median salary of $90,000 in 2013. These employees have degrees in higher education, such as a bachelor's or a graduate degree.
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. On the food service side, traditional wholesalers still dominate because they serve many small retail enterprises with specialized orders.
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. They are among the higher paid workers in the food industry, with an average payroll per employee of $57,000.
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Retail food stores had a total of $742.3 billion in sales in 2013. Food sales in retail stores represent 53 percent of all food sales of $1.4 trillion, with the rest of food sales taking place in some form of food service establishment (ERS, 2014d)
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. Workers The average income of food service workers, $24,857, is about the same as the poverty level for a household of four persons, $23,850 in
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. Worker health and safety Food service workers perform a variety of customer service, food preparation, and cleaning duties.
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. Many food service workers also report having no access to paid sick days.
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Table 5-1 shows the distribution of Fortune 500 food system companies across the food supply chain. The most numerous firms represent the food manufacturing and retail food sectors.
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POTENTIAL SOCIAL AND ECONOMIC EFFECTS ON U.S. CONSUMERS Perhaps the primary indicator of social and economic success in any food system is the ability to provide a population with an abundant supply of affordable, safe, high-quality, and nutritious food.
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food system serves the needs of consumers is the rate of change in food prices and the percentage of income required to purchase food. Historically, the Consumer Price Index3 (CPI)
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Food Security and Food Access Most U.S. households are food secure -- that is, they have access to a dependable food supply.
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. However, income is not the only factor in predicting food insecurity: households without liquid assets are much more likely to be food insecure, and income volatility is associated with food inse curity (Gundersen et al., 2011)
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. Due to these individual-level consequences, low food security also raises societal costs of providing education (e.g., due to higher educational investments needed when children are unable to learn because of food insecurity)
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A corollary to food insecurity is limited food access, which has been defined as the inability to purchase nutritious, affordable foods within a prescribed distance from home. There are several different food access issues: a lack of supermarkets in low-income areas; a lack of transportation to supermarkets or superstores; and an abundance of smaller stores, which charge higher prices and carry few healthy foods (Ver Ploeg et al., 2009)
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. Nutrition educators have been engaged in related efforts for many decades, but with quite limited resources compared to those of the food industry (Contento, 2010)
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Lowenstein (2013) reports that between 1980 and 2000 the relative price of food fell nearly 15 percent, and processed food prices declined the most.
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. In the latest IFIC survey, three-quarters of respondents believe that processing can help food stay fresh longer; 63 percent believe they benefit from modern food production and processing, with the top two benefits being improved food safety and prolonged freshness (IFIC, 2014a)
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. Concurrent with the increase in eating at restaurants and fast food establishments, the percentage of time spent on food preparation, along with the daily number of calories consumed from food eaten at home, decreased in all socioeconomic groups from 1965 to 2008 (Smith et al., 2013)
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. The aspects of sustainability reported as most important are conserving the natural habitat, ensuring an affordable and sufficient global food supply, and reducing the amount of pesticides (IFIC, 2014a)
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. Consumer concerns about sustainability have contributed to greater calls for corporate social responsibility among mainstream food supply chain firms.
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. The social and economic effects and differences that result from education, occupational working conditions, income, or other factors are closely tied to where people live (LaVeist et al., 2011)
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, created by the Economist Intelligence Unit in 2012, is a measure of food security across the three dimensions of affordability, availability, and use (quality and safety) that integrates 27 indicators.4 Measured by the GFSI, Asia/the Pacific and sub-Saharan Africa are the areas with the most food insecure people, by numbers and concentration, respectively (Economist Intelligence Unit, 2014)
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. Regional Differences in Social and Economic Impacts of Structural Change The impacts of structural changes in size and organization of firms in the food supply chain are not experienced equally in all places.
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One environmental issue that is affecting producers and consumers alike is the diminished quantity and quality of water. Changes in water associated with farm production and food manufacturing have direct impacts on the cost and quality of water available to small town and urban residents (see also Chapter 3 on the interactions among social, economic, and health effects, and Chapter 7, Annex 4 for a detailed description of the trade-offs among crop productivity and environmental and health effects with different nitrogen management approaches)
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Data Needs, Metrics, and Analytical Methodologies To conduct an assessment of the social and economic effects of alternative configurations of the food system and propose interventions (see examples of interventions in Box 5-1) , it is necessary to identify key metrics or indicators of social and economic effects.
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• ntitrust regulation that ensure competitive marketing opportunities for A independent livestock operators. • ccess to affordable health insurance through the ACA (Patient Protec A tion and Affordable Care Act)
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Thus, the ability to produce stratified estimates by scale along with key sociodemographic factors for social and economic effects is also limited. As a result, when these measures are of interest, analyses often have to extrapolate findings from one scale to another to generate estimates of the effects.
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Including these measures can help answer an important question when measuring economic effects: What is the percentage change in quantity that accompanies a 1 percent change in price or income? Demand analysis, a concept of market demand rather than individual behavior, is most useful in examining market trends and behavior.
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One of the issues in analyzing food demand and food choices is a lack of data needed to answer many current questions. For example, to determine the correlates of obesity, detailed data about individual food consumption, food prices, and household characteristics as well as health habits and diseases is desirable.
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Food prices affect food access and choices, so they are hugely important to the food system. Prices change in response to supply and demand, especially in response to changes in policies, new technologies, and food industry structure.
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Currently, reviews of the evidence on the role of farmer's wealth and food security, land property rights, and water and sanitation are included in the Campbell Collaboration database (Campbell Collaboration, 2014)
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2005. Household food insecurity and children's school engagement.
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2013. Household food security in the United States in 2012.
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2014. Global food security index.
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The multiple dimensions of food security. Rome, Italy: FAO.
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2010. Does household food insecurity affect parenting and children's behaviors?
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2014. Increasing homogeneity in global food supplies and the implications for food security.
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2008. Associations between housing instability and food insecurity with health care access in low-income children.
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Rome, Italy: The Bioenergy and Food Security Project, FAO. Marion, B
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food insecurity is related to changes in unemployment, inflation, and the price of food. Economic Research Report No.
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2010. Food insecurity is associated with chronic disease among low-income NHANES participants.
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American Journal of Agricultural Economics 92(2)
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2013. SNAP Food Security In-Depth Interview Study.
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2000. Returning African American farmers to the land: Recent trends and a policy rationale.
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