Import Share of Consumption
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Related Amber Waves Articles
Estimation Methods
Import Shares
Characteristics of Estimates
Data and Methodology
As the U.S. population has grown in both number and ethnic
diversity, the volume and variety of food consumed and imported in
the United States has increased correspondingly. In 2009,
U.S. food consumption totaled 654 billion pounds, or more than
2,100 pounds per capita. Of this amount, imports accounted for 17
percent (110 billion pounds), or 358 pounds per capita.
Imports account for an increasing share of food consumed in the
United States, much of which cannot be produced domestically due to
climate conditions and seasonality of crop production. Also,
some imported foods cost less to produce that their domestically
grown counterparts. Consumers prefer an increasingly wider
selection of food products, such as tropical fruit, vegetables,
nuts, premium coffee, wines and beers, cheeses, confections, grain
products, and processed meats. As more food producers and
processors, both domestic and foreign, vie to supply these
products, policymakers need to know which commodities are more
dependent on imports.
One approach to estimating the percentage of imports as a share
of food consumption uses the volume of food imports and
consumption, which is measured as the ratio between the physical
weights of food imports to total food consumed. Another
approach uses values (measured in dollars) for food imports and
consumed food. This study examines the differences in these two
procedures. Policy analysts and other researchers can use
this information to gauge the growing importance of imported
products as supplements to the food supplied domestically by U.S.
farmers and food manufacturers. The sections that follow
describe the methods and data used for each approach and their
strengths and weaknesses, provide import share estimates using both
approaches, and then analyze the differences between the two sets
of results.
Estimation Methods
Analysts use two approaches to estimate the import share of food
consumption. The first is based on the volume (i.e., the
physical weight) of imports divided by the volume of domestic
consumption for each food group or product. The second is
based on the values of imports and food consumed
domestically. In both approaches, the units of measure for
imports and consumption should be the same. For example,
since most U.S. red meat imports are measured in carcass weight,
red meat consumption should also be measured in carcass
weight. Likewise, since food imports are generally priced at
wholesale value, food consumption should be valued at the producer
price level, not at retail value.
The Volume Method:
There are a number of data requirements for estimating import
shares based on volume. In the ERS food availability and
disappearance database, the physical weights of imported processed
products are converted into their equivalent fresh or farm
weights. Thus, import units are compatible with consumption
units which are also measured in fresh or farm weights.
Liquid or quantity measures for food are converted into weight
equivalents using conversion factors or average weight per
unit. The ERS food availability database already provides
most of these conversions. Food consumption (or,
disappearance) volumes are estimated by adding imports to
production, then subtracting exports. Nonfood uses, such as
industrial materials, pet food, seed, feed, and losses in storage,
handling, and transport, are removed.
To estimate the import share of U.S. food consumption based on
volume, analysts divide the physical weight of imports for each
food group or their aggregate by the physical weight of the
corresponding food group or aggregate consumed in the United
States. Import volumes and consumption estimates of all food groups
are found in the ERS
Food Availability Data System. The foods derived from farm
animals are: Red meats, poultry meat, eggs, fish and shellfish,
dairy products, and animal fats. Foods obtained from plants
are: Vegetables oils, nuts, fruits (fresh, frozen, canned, and
dried), fruit juices, wine, vegetables (fresh, canned, frozen),
legumes (dry), food grains, sugar and sweeteners, tropical products
(coffee, cocoa, tea, spices), and beverages.
The Value Method:
Foods are classified as unprocessed or processed for the purpose
of valuing their cost of production. The value of unprocessed
foods is based on prices received by farmers and is represented by
farm cash receipts as estimated by ERS from NASS data. These
foods cover all farm commodities that are sold for fresh
consumption or for processing into food products. Thus, total
U.S. farm cash receipts for food commodities include the cost of
materials used by food manufacturers. As a result, the
estimated value of processed foods is represented by value added in
food manufacturing since the cost of materials is already included
in farm cash receipts for food commodities. The value of food
consumption (or use) is estimated as production value plus imports,
then minus exports. The production value for unprocessed
foods is their corresponding farm cash receipts, whereas the
production value of processed foods is their farm receipts plus
value added by manufacturers. Commodity and food stocks are
not accounted for given that the change between beginning and
ending stocks do not significantly affect the annual value of total
food consumption.
The import share of food consumption based on value is the ratio
of imported food value to domestic consumption value. Again,
no estimates of food losses due to waste or spoilage are accounted
for in calculating food consumption value. Assuming that food
losses apply proportionally to both imports and consumption, they
are expected to offset each other in the import/consumption
ratio. While stocks of food commodities owned by farmers are
excluded from farm cash receipts, processed food inventories are
not accounted for because data on the value of stocks of imported
food products are not available.
Unprocessed foods consist of the following groups: Food grains
(wheat and rice), peanuts, vegetables and melons, fruits and tree
nuts, meat animals, dairy milk, poultry and eggs, and fish and
marine. The groups under processed foods are: Grains and
oilseed milling products, sugar and confections, preserved fruit
and vegetables, dairy products, meat products, fish and seafood,
bakery products, other processed foods, and beverages. Each
is identified by a 4-digit NAICS code (North American Industrial
Classification System) with corresponding value added in
manufacturing and import values. The data sources are the
Annual Survey of Manufactures (U.S. Census Bureau), the
International Trade Administration's trade database (U.S.
Department of Commerce), and ERS farm cash receipts.
Import Shares
Estimates of the import share of total U.S. food consumption
based on volume and value were found to be not significantly
different from each other (tables 1 and 2). The import share
estimate in 2009 is 16.8 percent based on volume and 17.3 percent
based on value. In the early 1990s, the share estimates from
volume and value were both around 11 percent. Over the next
two decades both import shares gradually increased until the shares
based on value surpassed the shares based on volume in 2008.
Based on volume, the import share of animal products
climbed
from 5 percent to 6 percent over the same period, led by fish
and shellfish. For plant products, the import share went from
16.8 percent in 1990 to 25.6 percent in 2009.
The share of imports relative to the volume of food consumption
in 1989 was 11 percent, 13 percent in 1997, 15 percent in 2004, and
16.8 percent in 2009. These increasing import shares reflect
the 2.6-percent average annual growth of per capita food imports,
from 227 pounds in 1989 to 358 pounds in 2009. During the
same period, per capita food consumption (including imports) grew
by 0.3 percent on average annually, from about 1,998 pounds in 1990
to 2,127 pounds in 2009. As the U.S. population expanded from
247 million in 1989 to 307 million in 2009, imported food grew by
54 billion pounds in two decades even as domestic food production
increased by 107 billion pounds. In fact, U.S. food
production has grown by an average 1 percent annually over the past
20 years-about the same pace as population growth during that
period.
Based on volume, import shares by food group mostly show upward
trends. The share of imported grains and grain products in
consumption climbed from 9 percent in 1989 to 13 percent in
2009. Similar increasing import shares are observed for
fruits and nuts, vegetables, sweeteners, wine, and beer.
Among animal product groups, only fish and shellfish have large
import shares which have significantly grown over the past two
decades.
Import shares of food consumption based on value differ between
unprocessed and processed products. While both product groups
started with similar import shares of 10 to 11 percent in 1990, the
import share of unprocessed foods has grown faster to 19 percent in
2009 versus 16 percent for processed foods. This indicates
increasing amounts of imported fresh fruits, nuts, and vegetables
for direct consumption. Domestic food manufacturers are also
importing more raw and intermediate food commodities for further
processing. Indeed, U.S. imports of bulk and intermediate
food products grew from $6 billion in 1990 to $17 billion in 2009
(or in volume terms, from 6.6 to 12.3 million metric tons).
The growth patterns of the two import share measures reflect, in
part, the rising cost of imports as the dollar depreciated in
purchasing power beginning in 2003 (fig. 1). The cost of
imported foods has also increased significantly since 2006 as world
food prices followed farm commodity and petroleum prices to higher
levels. The United States continued to import high-value
products such as coffee, cocoa, sugar, coconut and palm oils, and
wine, whose prices were rising as the dollar kept
depreciating. The United States also continues to import
increasingly larger quantities of fruits and vegetables and other
horticulture products, a group that has not experienced any decline
in annual import value since 1992, before falling in the recession
year of 2009. In fact, U.S. agricultural import unit
values have risen by an average 6.8 percent rate annually from 2003
to 2008. This contrasts sharply with less than 1 percent
import cost inflation
on average in the preceding 6 years (1997 to 2002). Based
on these differing inflation rate patterns in recent years, it can
be inferred that import prices are distorting import shares based
on value by imposing an upward bias relative to import shares based
on volume.
Given that the value of U.S. food consumption in 2009 amounted
to an estimated $443 billion at the producer price level, and that
the corresponding consumption volume is 654 billion pounds, a pound
of food consumed in 2009 cost an average 68 cents at
wholesale. In 1989, the cost was 46 cents per pound.
This 2-percent average annual cost increase reflects both domestic
price inflation and import price inflation of food products
consumed in the United States, with import prices contributing an
increasing share over the past 20 years. Thus, since the
share of imports in U.S. food consumption was around 17 percent in
2009, then about 17 percent of wholesale food price inflation in
2009 is explained by or attributed to import prices. If
import prices rose faster than domestic food prices, imported foods
will account for more than 17 percent of the wholesale price
inflation in 2009. This can occur if the dollar depreciated
in price-adjusted terms against the currencies of countries that
supply U.S. food imports. Hence, one role that an import
share of food consumption estimate can play is to gauge the
relative contributions to overall inflation of imported food prices
as opposed to domestic-produced food prices.
Among the food groups, the highest import shares are for fresh
fish and shellfish, fruits and nuts, sweeteners, and wine and
beer. The import share for tropical products (coffee, cocoa,
tea, and spices) is nearly 100 percent since domestic production is
close to zero. Other examples of near 100-percent import
shares are bananas, tropical oils (palm, coconut, and palm kernel),
olive oil, and cashew nuts. Among fruits and vegetables, the
highest import shares are for apple juice, table grapes, and fresh
tomatoes. Other foods with increasing import shares include
lamb meat, melons, orange juice, frozen potatoes (French fries),
and candy. While some products are imported due to lack of
domestic production, others have increased over time as demand for
offseason produce, preferences for premium quality, and the variety
of imported food products have climbed along with consumer
incomes.
Foods with the lowest import shares, or foods with the highest
share of domestic production, include poultry meat and eggs, milk
and other dairy products, and bulk grains. Nevertheless, 21
percent of rice consumed by Americans is imported as well as
significant shares of grain products such as pasta, noodles,
flour/dough mixes, and other bakery input products. Thirty
percent of wine and 14 percent of beer are now
imported. Only 4 percent of U.S. pork and cheese
consumption is imported, and only 3 percent of peanuts, head
lettuce, and wheat flour. Other products that are produced
abundantly on domestic farms relative to foreign suppliers include
almonds, apples, oranges, canned tomatoes, and fresh
mushrooms. Some food imports are produced in foreign
countries by U.S.-owned enterprises, such as Dole pineapples, Del
Monte canned fruit, or Chiquita bananas.
Characteristics of
Estimates
Import shares can be calculated from either volumes or values of
imports and food consumption. Each method has advantages and
disadvantages. An advantage in using volumes or quantities is
that the effect of prices on import share is excluded. If
import and consumption volumes remain unchanged from one year to
the next, import shares should be the same. However, if
import prices rise relative to domestic prices (perhaps due to a
depreciated home currency), import shares based on value will be
higher even if import volumes did not change in proportion to total
food consumption. Disadvantages of using volumes (physical
weights) to estimate import share include the need to transform
liquid and other non-weight quantities into weight-equivalent
units, as well as converting product or processed weights into farm
or fresh weight units. Another shortcoming is that
water-laden products such as fresh produce are heavier than grains,
nuts, or spices that have little moisture content such that in $1
million worth of each commodity, for example, fresh produce will
typically weigh more than the low-moisture crops. As a
result, the aggregate volume of different commodities is biased
toward heavier water-laden crops.
If the value of food consumption is based on consumer food
expenditures, its import share will be underestimated because of
value added in the form of retail and food service margins,
overhead expenses, and labor costs. Since import values are
generally based on wholesale prices, they do not reflect food
service or retail costs. Thus, in order for import share to
be calculated from consistent or similar units, food consumption
value has to reflect wholesale or producer prices. If the
shipment value of domestically processed foods is used in
estimating the value of food consumption, the cost of materials
(raw and intermediate inputs for food processing) has to be
discounted to avoid double-counting farm receipts for food
commodities sold to processors/manufacturers. That is, total
U.S. farm cash receipts are added to value-added in domestic food
manufacturing to estimate food consumption value at producer
prices, after adding imports, and subtracting exports.
In terms of value, U.S. imports of consumer-ready foods
(including fish and shellfish) are more than twice those of
imported bulk and intermediate products that are not ready for
consumption without further processing. In volume terms, the
ratio is smaller since their relative weights are closer to each
other. In this case, the import share of consumer-ready foods
based on value will be greater than their import share based on
volume. This bias is corrected by ERS commodity analysts by
converting the product weight of imported processed foods into farm
or fresh weight in order to ensure consistency in estimators such
as import share of consumption. Nevertheless, as the United
States imports an increasing amount of high-value products such as
processed meats, wine, cheese, coffee, chocolate, olive oil, or
tree nuts, the overall import share based on value will rise
relative to import share based on volume. That is, if the
rate of increase in imports due to expensive products exceeds the
growth rate of total consumption in value terms, whereas their
corresponding volumes have a smaller growth differential, then the
overall import share of consumption based on value will climb
faster than the import share based on volume.
A seemingly logical way to estimate import share of consumption
from values is to multiply wholesale or producer prices by their
respective food import and consumption volumes. This
procedure, however, is flawed because it is mathematically
equivalent to using volumes. More critically, processed food
imports have value added, which is not accounted for when volumes
are used. While food import and consumption values (computed
as volume multiplied by price) are affected by both demand/supply
and price/exchange rate changes, their volumes are only affected
directly by demand/supply forces, and indirectly by price/exchange
rate fluctuations. That is, price changes alter import and
consumption demand (as well as production and export supply), which
in turn move the respective quantities demanded or supplied (i.e.,
volumes).
Given that food import and consumption volumes are more readily
available (in the ERS food availability database), calculating
import share from them is straightforward. For import share
based on values, due to no available data at wholesale prices, food
consumption value has to be roughly estimated from farm cash
receipts, value added in food manufacturing, and net imports.
Since farm sales receipts are recorded by commodity whereas value
added is by industry, import shares estimates by food group combine
commodity data with industry data in measuring food consumption
value. Thus, for the sake of expediency and relative
accuracy, using food import and consumption volumes are the better
choice. While there are sharply contrasting costs in terms of
data-gathering and calculation effort between the two import share
estimation methods, their results should be mutually consistent if
measurement errors are minimal. Indeed, judging from the
estimation results, the import share estimators-one based on volume
and the other on value-are found not to be significantly different
from each other.
Estimating the dollar value of U.S. food consumption at the
producer or wholesale level provides only an approximate measure of
the actual value. This is one disadvantage of using values to
calculate the import share of consumption (in addition to the
difficulty in obtaining the various input data). If the
volume of food consumed is unchanged from one year to the next but
prices have increased during the same period, then the value of
food consumption will have expanded. Only if the value of
imports grew by the same percentage as the value of consumption
will the import share of consumption based on values remain
unchanged in this case, as it would if based on volume. Thus,
the effect of changes in domestic prices of food commodities, as
well as the effect of changes in exchange rates on import costs,
can distort the import share of consumption based on value if
corresponding volumes do not change.
The estimated value of food consumed in the United States in
2009 was $450 billion, of which processed foods accounted for $297
billion and unprocessed foods accounted for $152.9 billion.
It should be noted that the value for unprocessed food consumption
is estimated from the sum of U.S. farm cash receipts for all food
commodities and imported foods, minus food exports. The
double-counting of farm sales receipts for food commodities
intended for processing (i.e., not consumed as unprocessed but
counted) is corrected by using only value added by food
manufacturers to estimate the value of U.S. processed food
production. This adjustment in valuing processed food
production helps avoid overestimation of food consumption value
that effectively leads to underestimating import share of
consumption.
Some imports compete with domestic products, such as grain
products, processed meat, cheese, sugar, wine, and beer. If
the responsiveness of import demand to price changes is high, the
analysis of contributions of import prices relative to domestic
prices to overall food price inflation will be dynamic. That
is, if import prices of competing products rise faster than their
domestic counterparts, consumer preference is expected to shift
more in favor of the domestic products over at least the short
term. This change in preference will be reflected in a lower
import share of consumption for that food group in the following
year (if using annual data), which implies a relatively smaller
contribution of import prices to overall food price
inflation. Thus, the estimated import share of consumption
each year serves effectively as a weight that can be used to
calculate a composite wholesale price which is a weighted average
of import prices and domestic prices.
Measuring import share using volumes is more straightforward
because the import and food consumption (or disappearance) data are
readily available from the ERS online database. In addition,
this approach avoids the effect of changing prices in the absence
of volume change. Alternatively, using dollar values to
calculate import shares requires one data source for imports and
two other sources for estimating the value of U.S.-consumed
food. Estimating food consumption from production values of
processed and unprocessed foods and their net imports is a
cumbersome and indirect procedure, which also raises the likelihood
of measurement and calculation errors. Despite these
differences in data and methods, the volume-based and value-based
measures resulted in comparable import shares that show similar
upward trends. Although import shares by food groups may
differ between the two measurement methods, their estimated
aggregate import shares for total food disappearance were found to
be not significantly different.
Data and
Methodology
ERS maintains an online database of the food available for
consumption in the United States. The ERS Food Availability
(Per Capita) Data System includes historical supply-and-use tables
for most of the food commodities that make up the American diet
(e.g., beef, chicken, eggs, fruit and vegetables). The data cover
imports and domestic food disappearance (consumption and
waste). Estimates of the import share of the volume of each
food item or food group are derived from this database. For
import shares based on value, estimates are calculated using the
U.S. Census Bureau's Annual Survey of Manufactures, which provides
data on value added in the manufacture and processing of farm
commodities. ERS's farm
cash receipts estimates provide data on production value for
unprocessed food commodities. USDA's Global
Agricultural Trade System (GATS) database provides data on
import values.
In ERS's
Food Availability (Per Capita) Data System, foods consumed in
the United States are categorized into ten groups: four are
produced from farm animal products and six are produced from plant
products. U.S. food imports are divided into these groupings
as well:
Animal products:
- Red meat
- Poultry and eggs
- Dairy products
- Fish and shellfish
Plant products:
- Grains and products
- Fruit and nuts
- Vegetables
- Sweeteners
- Tropical products (coffee, cocoa, tea, spices)
- Wine and beer
Nonfood agricultural products, such as animal feed or industrial
materials, are excluded from these food groups. A
comprehensive list of all U.S. food imports is available at ("Value of U.S. food
imports, by food group" in 14 Excel tables). The ERS Food
Availability database provides data for volume of production,
imports, exports, stocks, and disappearance (consumption and waste)
for each food commodity. The ten food groups can also be
classified as either unprocessed or processed. Within these
groups, unprocessed foods that are consumable without further
processing include fresh fruit, fresh vegetables, tree nuts, and
eggs. The remaining foods are classified as processed or
manufactured products before final sale to consumers, including all
food commodities that are cut, frozen, dried, canned, bottled,
preserved, prepared, juiced, or fermented. All meat, dairy,
grain, oilseed, and sweetener products are considered processing
commodities as they require further processing before
consumption.
Industry data defined by NAICS codes (North American Industry
Classification System) are used for the production, import, and
export values of processed foods in estimating the value of U.S.
food consumption at the wholesale level. Farm cash receipts
as estimated by ERS are used as values of unprocessed food
commodities (much of which are inputs in food processing).
U.S. Census trade values for unprocessed food commodities are then
combined with farm cash receipts to calculate consumption values of
unprocessed foods. Finally, consumption values of processed
and unprocessed foods as well as values of imported processed and
unprocessed foods are added together to calculate the combined
import share for processed and unprocessed foods. Thus, the
aggregate import share for all consumed foods reflects commodity as
well as industry data.
The following food groups represent non-manufactured products of
the crop production industry (NAICS 111) whose import and export
values and corresponding farm cash receipts are used in estimating
the import share of food consumption:
- Grains and oilseeds (NAICS 1111)
- Vegetables and melons (NAICS 1112)
- Fruits and tree nuts (NAICS 1113)
- Beef cattle; swine (NAICS 1121, 1122)
- Poultry; sheep and goats (NAICS 1123, 1124)
- Farm fish and products (NAICS 1125)
- Fish and marine products (NAICS 114)
The source for import and export data for these food groups is
the U.S.
Department of Commerce's International Trade Administration,
which identifies product groups by 4-digit NAICS codes. This
is the same source for trade data of the manufactured food industry
(NAICS 311) whose product groups are listed below. The
Customs value for imported merchandise is the transaction value at
port of entry into the United States. These include packing
costs, selling commissions, and license fees incurred by the
importer. Excluded costs are transportation, insurance, and
other related expenses before reaching the port of
entry. Customs duties and other federal taxes paid by
the buyer upon entry are also excluded from the imported good's
customs value.
- Grain and oilseed milling (NAICS 3112)
- Sugar and confections (NAICS 3113)
- Preserved fruit and vegetables (NAICS 3114)
- Dairy products (NAICS 3115)
- Meat products (NAICS 3116)
- Fish and seafood (NAICS 3117)
- Bakery products (NAICS 3118)
- Other processed food (NAICS 3119)
- Beverages (NAICS 3121)
The production value for beverages is corrected to remove value
added in distilleries (for spirits and liquor). Value added
by food manufacturers is obtained for these NAICS codes from the
U.S. Census Bureau's Annual Survey of Manufactures. These food
industry data are aggregated in estimating the import share of the
value of total food and beverage consumption in the United States,
as shown in the summary table below. For each food aggregate
(or group), imports are divided by that food aggregate's total
consumption, which includes those imports.
To credibly compare these value-derived estimates with
volume-based estimates of food consumption, supply and use
accounting was critical to both approaches. As applied to
commodities, food consumption equals total supply (production plus
imports) minus exports. In this equation, food consumption is
effectively a residual use variable which implicitly includes
imports. That is, food consumption is a domestic use
variable.