Economics
of the Food and Fiber System
The U.S. food and fiber system (FFS) is a source of
jobs and earnings for millions of American workers
and a supplier of products worldwide. The food and
fiber system encompasses a vast range from farm suppliers
to fast food chains. The activities of farmers, processors,
manufacturers, wholesalers, retailers, restaurateurs,
and transporters are coordinated to satisfy the changing
demands of households, businesses and government, and
other nations.
The total FFS economy added $1.24 trillion to the Nation’s gross
domestic product (GDP), a measure of the Nation’s wealth, and provided
jobs for 23.7 million workers in 2001. Of the $1.24 trillion, almost
$339 billion came from services, while $334 billion came from trade,
and $73.8 billion from the farm sector.
Food and fiber GDP and employment increased almost
every year between 1972 and 2001. Because the rest
of the economy grew at a relatively faster pace, however,
the food and fiber share of national GDP and employment
declined. The FFS share of total GDP was 12.3 percent
in 2001, down one-third from 1972. Similarly, employment
generated by the system has trended downward from 23.4
percent of total employment in 1972 to 16.7 percent
in 2001.
Changes in consumer demand for products and services affect both size
and contribution, in jobs and value, of industries within the food and
fiber system. Consumers now demand more services in their total food
and fiber consumption shopping cart, and food consumed away from home
has increased. In 2001, households spent 46 percent of their total food
dollar in restaurants, compared with 34 percent in 1972. According to
ERS research, spending in grocery stores accounted for 53.8 percent of
the food dollar in 2001, down from 66 percent in 1972.
The core materials sectors—farm, food processing, textiles, and
other manufacturing—generated 41 percent of food and fiber GDP
and employment in 1972, falling to 30 percent of GDP and 21 percent of
jobs in 2001. Wholesale and retail trade and the foodservice sectors
grew, providing 63 percent of all food and fiber system jobs in 2001.
The trade and service sectors generated the most GDP in 2001, almost
55 percent of the FFS total. In 1972, the trade sector (wholesale and
retail) contributed the most to GDP, followed by services, other manufacturing,
food processing, and farming. In 2001, services tied trade as the largest
industry, and foodservice has become the fourth largest in the food and
fiber sector.
Farm employment has remained steady since 1972, while the textile industry
has fallen from the fifth largest generator of jobs to the seventh
out of eight FFS industry sectors. Foodservice and trade have been
the growth sectors for food and fiber sector jobs. The share of foodservice
jobs in the FFS sector increased from 15 percent in 1972 to 28 percent
in 2001.
The various sectors of the food and fiber system affect the economy differently.
In some sectors, such as food processing, the share contributed to GDP
was more than twice the share of employment. In contrast, the relatively
low-wage, labor-intensive foodservice sector job share was more than
twice its GDP share in 2001.
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