Where the Food at Home Dollar Goes

June 23, 2014

The latest from The Food Institute.

Food processing added 24 cents to every dollar of food produced for consumption at-home (retail) in 2012, according to updated data from USDA’s ECONOMIC RESEARCH SERVICE—down 2.5 cents from 10 years ago, according to THE FOOD INSTITUTE analysis. The decline indicates that food processors are operating more efficiently than a decade ago as a result of technological advances in equipment and perhaps more careful monitoring of costs associated in production. 

This is not surprising when combined with some preliminary findings from the latest Five-Year Economic Survey that also covers 2012, issued by the CENSUS BUREAU.

While the number of food manufacturing plants actually declined by five facilities in just the prior five years, the productivity per plant jumped 27% to an average $29.2 million, according to Food Institute analysis of the new data.

Productivity per employee, meanwhile, increased by nearly one-third to $531,624.

Thus, food manufacturers have been very successful taking costs out of the supply chain between 2007 and 2012.

And that increase in food manufacturing even outpaced the overall manufacturing industry, which saw facility productivity rise six percentage points less to 21% and employee productivity rise 29% (down three percentage points) in the same period.

Back to the food dollar, retailing costs increased 1.6 cents on the dollar to 22.6 cents, perhaps as a result of increased store sizes. Only the share for farm production increased more, by 3.6 cents to 14.6 cents per dollar.

Not surprising, energy costs also took a much bigger bite than a decade ago, accounting for 6.3 cents compared to 4.8 cents in 2012.