Post on 26-Dec-2015
Chapter 2: Economic Importance of Marketing Activities
Value added – form, space, time
Conceptual and Measurement Issues
Sources: Food Expenditure Data
Trends: food expenditures and consumption
Alternative Measures of Marketing Services
Price spreadsOther measures - GDP/employment
Conceptual and Measurement Issues (marketing services)
What is the concept you want to measure?• data available correspond to the concept?
Aggregate Measurement Concept:
(aggregate food retail value - aggregate farm gate value)
Aggregate retail expenditures; aggregate agr output problems with implementation
Comparability of agr and food products
What is a retail food product ? (home, food service, institutional)
What is an agriculture product ? (pet food, tobacco, fibres - cotton/flax)
Industrial uses (ethanol, biodiesel, starch)
Data Sources: Food ExpendituresDifferent data sources are different – different objectives
United StatesUSDA - Agr. Marketing Service - ERSUS Dept of CommerceBur. of Labour Statistics
CanadaAgriculture and Agri-food Canada:Statistics CanadaHealth Canada
Private and Other Public Sources
Private Corporations: A.C. NielsonIndustry OrganizationsUniversity InstitutionsPrivate “Think Tanks” (George Morris Center; Guelph)
International: FAO, IFPRI, World Bank, ILO
Measuring Food Expenditures and the Value of Marketing Agr + Food Products
What’s an Agri-Food Product?
Practical Challenges:
What is included?
Fish, beef bones, Pet food, cotton, hemp
Beer/Wine Spirits, ethanol, biodiesel
Conceptual Issues
working with the data you have
Individual Food Products Measurement Concept
Excludes export marketing servicesIncludes import marketing services
Tomato on farm versus tomato at retail
Tomato => many products (pizza)
Challenge: Converting from primary to processed
Joint production - co-products
Beef (steak vs beef on the hoof)Wheat (loaf of bread vs bushel of wheat
Food away from home Lettuce in a hamburger
Adjustments for trade Retail expenditure data
US Retail Food Expenditure Data
USDA – Concept 1: Total retail value of FOOD consumed in the USA
Different expenditure data from USDA and Commerce Dept.
USDA – Concept 2: Personal expenditure data
Purchases, donated, home-produced for human consumption–all sources+ Government/business food services
– excludes non-purchases & food provided to employees
– measures expenditures out of personal income
Department of Commerce Food Expenditure Data
Personal Food Expenditures
Results in different proportion of disposable income spent on food
Includes pet food, ice, prepared feed
Changes in Food ExpendituresRole of marketing services
Expenditures on food and marketing are increasing
Growth in away from home consumption
More processing
Prices increasing (even adjusted for CPI)
Population growth
Some Canadian Data
Canada – expenditures out of household income
1961 – 20% of household income on food and non-alcoholic beverages:2005 – 9.3%
2005 – Canadian food expenditures (AAFA)
$131 Billion – food & beverage (including alcohol)$4K per capita (32 Million Population)
$ 71 B in grocery stores (66%)
$ 37 B in food service establishments (34%)--------------$ 108 food expenditures
$ 24 B for alcohol
Changes in Consumption of Individual Products
US - Bur of Labour Statistics and USDACanada - Statistics Canada; AC-Nielson (scanner data)Expenditure weights for CPINutritional status analysis
1) Disappearance data
Production + (beg. stocks - end. stocks) + (imports - exports)
Defined for primary food commodities (beef, eggs, milk)Approximate per capita consumption (waste is estimated)Adjusted for industrial and nonfood use to estimate food consumption
2) Periodic household surveys
Data Sources - Food Expenditures
Canada
Agriculture and Agri-food Canada:Statistics Canada – Food Expenditure SurveysHealth Canada
Consumer Expenditures (2013 active)
http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1171288446081&lang=eng
United States
USDA - Agr. Marketing Service, Economic Research ServiceUS Dept of Commerce, BLS
USDA food consumption (per capita) data system (2013 active)
http://www.ers.usda.gov/data-products/food-availability-%28per-capita%29-data-system/.aspx#.Ug6UbKyZaVY
Alternatives to Aggregate ExpenditureRetail-Farm Price Spreads
Value of Marketing Services
Concept: Calculated for individual products
(retail price - imputed farm values)
Imputed farm valuesFarm prices and conversion factors
Practical Difficulties - adjustments
Multi-ingredient productsCo-products
USDA Market Basket Concept
Retail-farm price spread – set (Basket) of products
• retail prices for home consumption (no restaurants)
• excludes seafood, and nonalcoholic beverages
• Weighted by average quantities of food products purchased
Farm value based on farm prices
Difference = value of marketing services
Narrow range of products
Set of products relatively static
USDA Marketing Bill Concept
Share of consumer $ spent on marketing
1) Compute total retail food expenditures
– All/most food products (includes non-alcoholic drinks)– includes away-from-home purchases– excludes imports and seafood
2) Farm values - based on farm gate prices
(1) – (2) = Estimated value of marketing services
Measures vary
market basket (static) or marketing bill (dynamic)
• what is included
• how pattern of purchases evolves
Farm Share of Retail Food Expenditures
Market basket => higher farm share
Both measures => declining farm share
Other Economic Measures
Contribution to GDP
– Includes import and export marketing services
Employment
Schrimper provides US data
Canadian Data Follow
An Overview of the Canadian Agriculture and Agri-Food System 2013, Research and Analysis Directorate, Strategic Policy Branch, Agriculture and Agri-Food Canada, Ottawa. ISSN 1708-4164 2013
Revenues generated for each sector
An Overview of the Canadian Agriculture and Agri-Food System 2013, Research and Analysis Directorate, Strategic Policy Branch, Agriculture and Agri-Food Canada, Ottawa. ISSN 1708-4164 2013
Canadian AAF System GDP: 8.0% (2011)
Primary Agriculture 1.7% GDP Marketing System 6% (Post Farm-Gate)
$100 Billion Total GDP
Exports: $ 40 BillionImports $ 31 Billion
2011 Consumer spending: food, beverages and tobacco = $181 Billion
18% of personal spending
Spending on food and non-alcohol = 10% of personal household expenditures
Government support to the AAF System (all levels) = $ 7.5 Billion (2011/12)
$2.7 Billion in program payments to primary agriculture (PSE 2011 = 14%)
A few more numbers from the AAFC 2013 Report
Research Support (In real terms):
1990 $500 Million ($ 2002)2011/12 $430 Million ($ 2002)