U.S. holiday shoppers can count their blessings. Those year-end dollars available for last minute stocking stuffers or to put in a tax deferred annuity are in no small measure the result of the extremely low cost of food in this country. The following data describe the share of annual per person cost of food compared to total personal consumption expenditures for 19 countries around the globe. (Figure 1 and Figure 2 vividly illustrate these data.)

The U.S. is the clear winner with only 7.7 percent of per capita personal spending going for food and nonalcoholic beverages. Note that in other developed countries, total food expenditures tend to leave much less money available for other purposes than in the U.S. And in developing countries, even with extremely poor diets, food costs account for as much as two-thirds of total income.

Expenditures in the U.S. as a share of total spending are the lowest in the world despite the fact that our food expenditures tend to embody far more value added processing, marketing, and services than in other countries. For example, in the U.S., food expenditures away from home now account for 45 percent of total food costs. As another example, the farmer share of the U.S. consumer food dollar is now only about 25 cents, based on a "market basket" of food sold in grocery stores.

Except for a few countries noted on the graph, food expenditures do not include alcoholic beverages. If alcoholic beverages were included, the U.S. position would be even more clearly the lowest in the world. Without alcoholic beverages, the U.S. food share is 7.7%; with alcohol, it is 8.8%. By contrast, Canada is 10.1% without alcohol; 12.4% with. The U.K. is 11.5% without; 17.5% with. France; 15.2% and 17.2%. Lower alcohol expenditures in the U.S. may be attributed to a combination of price, excise taxes, and consumption levels of alcoholic beverages.

Why are we so fortunate? There are a number of reasons why our relative food costs are so low.

Among them are:

-----Obviously, incomes in this country are among the highest in the world, which one would expect to result in more money available for non-necessities. But look at how we compare with Japan and Switzerland. Despite the fact that total personal spending in those two countries is several thousand dollars higher than here, our low food costs result in about the same money available for non-food spending.

-----Our domestic public policy for food and agriculture is more rational than that of virtually every other nation -- at least from the consumer viewpoint. For all but a few commodities, American farmers now produce for the marketplace. In contrast, most other developed countries farmers are subsidized with high guaranteed prices, or with supply restrictions that drive up domestic prices. New Zealand and Australia are the exceptions, while EU members and Japan offer the highest levels of subsidies. In sharp contrast, most of the developing countries tax their farm sector heavily, which results in lower farm investment and lower food production.

-----Similarly, food trade policy in the U.S. is much less protectionist than that of most other countries. Tariff and nontariff barriers to food imports are low and getting lower. Under NAFTA, they will be phased out completely with Canada and Mexico early next century. Thus, U.S. consumers can enjoy competitively priced, high quality grapes from Chile, wine from France, and lamb from New Zealand. High domestic farm prices in the EU and Japan mean that these countries must rely on extremely high tariffs and non- tariff barriers. Otherwise, imports from lower cost countries like the U.S. would flood in, driving their farm prices down. Of course, European and Japanese consumers pay the tab for this protection.

-----First and foremost, the U.S. agricultural sector from farm to dinner plate is by far the most efficient in the world. This huge sector, which accounts for 16 percent of the jobs in this country, owes its productivity to a number of factors. We are blessed with abundant natural resources. Many other countries are endowed with poorer weather or soils for food production. But more important, the sector is efficient because it is responsive to the market -- not government edicts. U.S. farmers and agricultural business must be efficient to survive, and they are the best and most technologically advanced in the world.

-----Finally, U.S. food consumers can thank our agricultural research and education system. Congress created the Department of Agriculture in 1862 and the same year created the land grant university system to educate people in "practical problems" of agriculture and mechanics. In 1887, the LGU's were provided federal funds for agricultural research at experiment stations associated with the colleges. In 1890, the concept was extended to the black agricultural colleges in the south. In 1914, the land grant system was provided federal funds to create extension programs to transmit research findings to farmers and citizens. No other nation has such a system. Returns on public investment in agricultural research and education have been estimated as high as 60 percent. Ultimately, the primary benefit to the public has been better food at lower real prices.

There are more than a couple of ironies in this picture. For one thing, Congress has waffled on extending Fast Track negotiating authority to the President for expanding NAFTA. Protectionist influence seems to be on the rise, despite the proven overall benefits of freer trade. The U.S. House of Representatives passed, but failed to send to conference a bill extending federal funding for agricultural research and extension into the next century. In an era of tight budgets, many land grant universities have had a difficult time securing level state appropriations for agricultural higher education, research and extension.

The biggest irony may be that food has become such a minor part of the typical U.S. household's budget that it is viewed as unimportant. I wonder what the attitude would be if we spent twice as much of our income on food, as in France? Or three times as much, as in Spain?

Finally, the figure shows the continuing harsh realities of food availability in the developing world at a time when funding for U.S. food aid has been declining. Nor should we forget that averages don't tell the whole story -- we have hungry people in our country today too.

Relatively speaking, these figures indicate that we do indeed have a "cheap food" policy -- one that U.S. consumers can be thankful for.

THE CLEMSON UNIVERSITY COOPERATIVE EXTENSION SERVICE OFFERS ITS PROGRAMS TO PEOPLE OF ALL AGES, REGARDLESS OF RACE, COLOR, SEX, RELIGION, NATIONAL ORIGIN, OR HANDICAP AND IS AN EQUAL OPPORTUNITY EMPLOYER.
COOPERATIVE EXTENSION WORK IN AGRICULTURE AND HOME ECONOMICS--STATE OF SOUTH CAROLINA, CLEMSON UNIVERSITY, U.S. DEPARTMENT OF AGRICULTURE, AND SOUTH CAROLINA COUNTIES COOPERATING.

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updated 12/29/97