A Revised and Expanded 

Food Dollar Series

A Better Understanding of 

Our Food Costs

Patrick Canning

Economic

Research

Service

Economic

Research

Report

Number 114

February 2011

United States 

Department of 

Agriculture

2008 Marketing Bill Series

2008 Industry Group Series

2008 Primary Factor Series
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Recommended citation format for this publication: 

Canning, Patrick. A Revised and Expanded Food Dollar Series: A 

Better Understanding of Our Food Costs, ERR-114, U.S. Department 

of Agriculture, Economic Research Service, February 2011.

Cover art: USDA, Economic Reseach Service.

www.ers.usda.gov

Visit Our Website To Learn More!

Find additional information about the ERS food 

dollar series in a searchable database at:

www.ers.usda.gov/Data/FoodDollar/
United States

Department

of Agriculture

www.ers.usda.gov

A Report from the Economic Research Service

Abstract

A new ERS food dollar series measures annual expenditures on domestically produced food 

by individuals living in the United States and provides a detailed answer to the question 

“For what do our food dollars pay?” This new data product replaces the old marketing bill 

series, which was discontinued due to measurement problems and limited scope. The new 

food dollar series is composed of three primary series, shedding light on different aspects 

of evolving supply chain relationships. The marketing bill series, like the old marketing 

bill series, identifi es the distribution of the food dollar between farm and marketing shares. 

The industry group series identifi es the distribution of the food dollar among 10 distinct 

food supply chain industry groups. The primary factor series identifi es the distribution of 

the food dollar in terms of U.S. worker salaries and benefi ts, rents to food industry property 

owners, taxes, and imports. To provide even more information about modern food supply 

chains, each of the three primary series is further disaggregated by commodity groupings 

(food/food and beverage), expenditure categories (total, food at home, food away from 

home), and two dollar denominations (nominal, real). The input-output methodology behind 

the new food dollar series and comparisons with the old marketing bill series are presented. 

Several key fi ndings of the new series are highlighted and discussed.

Keywords: food dollar, farm share, marketing bill, industry value added, primary factor 

value added, input-output analysis, supply chain analysis 

About the Authors

Patrick Canning is a senior economist with the U.S. Department of Agriculture’s Economic Research Service. 

Acknowledgments

The author benefi ted from reviews by Ken Hansen of USDA’s Economic Research 

Service, Howard Leathers from the University of Maryland, and Nicolas Rockler from 

the Massachusetts Institute of Technology, and from Courtney Knauth for editorial assistance and Wynnice Pointer-Napper for design assistance.

Patrick Canning, pcanning@ers.usda.gov

A Revised and Expanded Food 

Dollar Series

A Better Understanding of Our 

Food Costs

Economic 

Research 

Report 

Number 114

February 2011
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Contents

Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

A New Approach To Estimating and Presenting the Food Dollar. . . . . . 5

 Accounting for Imported Ingredients in Domestically 

 Produced Food. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

 Measuring Food Dollar Expenditures and the U.S. Farm Share. . . . . . . . 6

 Annual Food Dollar Estimation Model. . . . . . . . . . . . . . . . . . . . . . . . . . . 8

 Farm Share and Food Marketing Bill Estimates: 1993 to 2008 . . . . . . . . 9

Components of the Food Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

 Industry Group Value-Added Composition of the Food Dollar . . . . . . . 15

 Primary Factor Return Composition of the Food Dollar . . . . . . . . . . . . 17

 Analysis of Industry Group Primary Factor Returns: 1993 to 2008. . . . 19

The Food Dollar: Looking Ahead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Appendix: Data Sources and Mathematical Derivation 

 of the Food Dollar Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

 Data Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

 Disaggregation and Decomposition of IO Accounts . . . . . . . . . . . . . . . 36

 Supply Chain Analysis To Measure Value Components 

 of the Food Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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Summary

For many years, USDA’s Economic Research Service (ERS) has analyzed 

annual spending by U.S. consumers on domestically produced food. ERS has 

published fi ndings from this analysis in a series known as the marketing bill, 

which identifi ed the costs of marketing the raw farm commodities contained 

in a typical dollar’s worth of U.S.-produced food and the share of the typical 

food dollar going to farmers. Measurement problems, the discontinuation of 

several underlying data sources, and increased interest in evolving supply 

chain relationships prompted ERS to replace the old marketing bill series 

with a new expanded data series. This new series, named the food dollar 

series, provides a more detailed answer to the question, “For what do our 

food dollars pay?” 

The New Food Dollar Series

The new food dollar series is composed of three primary series, each of 

which provides a different way of slicing the same food dollar to provide a 

variety of perspectives: 

• The marketing bill series, like the previous series of that name, identifi es 

the distribution of the food dollar between farm and marketing shares. 

This series indicates that the costs of marketing farm commodities to U.S. food consumers were an average of 4 cents higher per 

consumer food dollar than was previously reported between 1993 

and 2006. In 2008, the farm share was almost 16 percent.

• The industry group series identifi es the value added from 10 distinct 

food supply chain industry groups to the food dollar (that is, the marginal 

contribution of each industry group to the fi nal food product). 

The farm and agribusiness share in this series differs from 

the farm share in the current marketing bill series (and the old 

marketing bill) in that it does not include nonfarm value added. 

In 2008, 4.2 cents of the 15.8-cent farm share was value added 

from nonfarm supply chain industry groups, such as energy, 

transportation, and fi nancial services. 

This series indicates that payments from each food dollar going 

to the energy industry group approached 7 cents in 2008, an 

increase of 75 percent since 1998. These estimates are higher 

than those provided by the old marketing bill series, which only 

measured direct energy use of food processors, retailers, and 

foodservice establishments.

• The primary factor series identifi es the distribution of the food dollar in 

terms of U.S. worker salaries and benefi ts, rents to food industry property 

owners, taxes, and imports. 

This series indicates that U.S. worker salaries and benefi ts 

coming from each food dollar steadily declined from 55 cents to 

51 cents between 2001 and 2008. 

Imported ingredients, both food and nonfood, accounted for a 

growing share of the food dollar, climbing from less than 5 cents 

in 1993 to nearly 8 cents in 2008.
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To provide even more information about food supply chains, each of the 

three primary series is disaggregated into food-at-home and food-awayfrom-home series and into total food expenditures that do not include soft 

drinks and alcoholic beverages and total food expenditures that include them. 

Interestingly, in the food-at-home marketing bill series, the farm share of the 

food dollar remained around 24 cents from 1993 to 2008, suggesting that 

increasing expenditures on food services are behind much of the reduction in 

the farm share in the total marketing bill series.

In total, the new food dollar series includes 36 individual series, created 

by permutations of the three component series (marketing bill, industry 

group, primary factor), with the two commodity groupings (food/food and 

beverage), the three expenditure categories (total, food at home, food away 

from home), and the two dollar denominations (nominal, real). The series 

spans the period from 1993 to 2008 and will be updated annually. 

How and Why Was the New Food Dollar 

Series Constructed?

Annual input-output (IO) data for the years 1993 to 2008, published by the 

Bureau of Labor Statistics; data from the 1997 and 2002 detailed U.S. benchmark IO accounts; and annual IO data for the years 1998 to 2008, published 

by the Bureau of Economic Analysis (BEA) were compiled and reconciled to 

2008 Marketing bill series

15.8¢ 84.2¢

Marketing share

Farm

share Farm & agribusiness

Food processing

Packaging

Transportation

Retail trade

Food services

Energy

Finance & 

insurance

Other

11.6¢

6.8¢

13.6¢

33.7¢

4.0¢

3.5¢

18.6¢

4.4¢

3.8¢

2008 Industry group series

2008 Primary factor series

Imports Property income Salary & benefits

Output

taxes

7.8¢ 8.4¢ 33.0¢ 50.8¢
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produce annual food marketing bill estimates for the period 1993-2008, using 

conventional IO analysis. Supply chain IO analysis determines where food 

dollars wind up (as income) by tracing the market value-added measures for 

10 supply chain industry groups and three primary production factors (labor, 

domestic industry assets, and imports). All estimates were reported in both 

nominal (current price) and real (infl ation-adjusted) dollars.

This new approach to assessing what our food dollars pay for is superior to 

the former approach in several important ways:

• The quality, timeliness, and completeness of the new source data ensures 

that a complete accounting of the entire food system is derived from a 

single consolidated data source.

• A precise approach to measuring and reporting the cost components of 

the entire food dollar in the new series avoids the potentially confusing 

divisions of the previous marketing bill series.

• The new food dollar series provides a more complete accounting of the 

modern global food system.
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Introduction

Increases in marketing costs for U.S.-produced food commodities have 

outpaced increases in the payments farmers have received for these commodities over most of the past 40 years (Elitzak, 1999, 2004). Economic theory 

provides several market structures that could explain this trend. For example, 

a purely competitive market can produce regular fl uctuations in the marketing 

margins of food commodities, driven by population growth and asymmetric 

supply elasticities for farm commodities and marketing services (Gardner, 

1975). Alternatively, when a market segment becomes highly concentrated, 

collusive pricing strategies among large establishments within this segment 

can elevate prices, reducing market demand and suppressing prices received 

by producers who supply commodities to these establishments (Canan and 

Cotterill, 2006). However, a persistent increase in the U.S. food marketing 

bill over an extended period suggests that something more fundamental may 

also be behind the trend for food marketing costs to rise faster than farmers’ 

proceeds, such as changes in both the structure of the food marketing system 

and in the socioeconomic characteristics of food consumers.

With passage of the Agricultural Marketing Act of 1946, Congress mandated 

that:

 “The Secretary of Agriculture is directed and authorized to determine costs of marketing agricultural products in their various 

forms and through the various channels...” [U.S. Code, Title VII, 

Chapter 38, Section 1622 (b)]

A measure known as the “farm share of the food dollar” was developed by 

USDA’s Economic Research Service (ERS) to meet the mandate for reporting 

the marketing cost for overall food production. The ERS estimates have come 

to be called the “food marketing bill.” 

Beyond the information explicitly called for in the original mandate, the ERS 

food marketing bill program has historically provided an itemized analysis 

of annual marketing costs, called “components of the food marketing bill.” 

Figure 1 illustrates the way ERS reported the two data series of the food 

marketing bill program, the farm share and the marketing bill, in the form of 

a dollar bill. Each section of the dollar depicts average costs by category for 

supplying a typical dollar’s worth of food to U.S. households. In this format, 

costs can be expressed interchangeably in terms of cents on a dollar or 

percentage of total food costs. 

ERS food marketing bill estimates have been based largely on a combination of annual data and less frequent Census benchmark statistics that must 

be adjusted, using conversion factors to conform to the food marketing bill 

concepts. Over time, the quality and quantity of data for estimating the food 

marketing bill has diminished, and the method for calculating the marketing 

bill has become unreliable. A number of authors have discussed food 

marketing bill estimation issues (Gale, 1967; Harp, 1987; Schluter, Lee, and 

LeBlanc, 1998; Elitzak, 1999). The aim of the present study is to introduce a 

systematic method for measuring the marketing bill, using annual data that 

are being generated on a regular basis.
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This report presents the new approach developed by ERS for estimating the 

food dollar and its component parts.1 With the new procedures, the complete 

food dollar, not just the food marketing bill, is divided into total value added 

for 10 industry groups: farm and agribusiness, food processing, packaging, 

transportation services, energy, retail trade, food services, fi nance and insurance, advertising, and legal-accounting-bookkeeping services. Next, the 

primary factor returns series divides the food dollar by the contributions 

of three primary production factor groups: domestic hired labor, domestic 

industry assets, and international imports. Finally, a cross-tabulation table 

divides the food dollar into the primary factor returns for each industry 

group. All estimates are reported in nominal (current price) and real (infl ation adjusted) dollars. The box “The New Food Dollar Series: A Glossary of 

Key Terms,” presents a list of terms used in the report and their defi nitions.

This new approach to assessing what our food dollars pay for is superior to 

the former approach in several important ways. First, the quality, timeliness, 

and completeness of the new source data ensure that a complete accounting 

of the entire food system is derived from a single consolidated data source. 

Because the new annual data are largely survey based, year-to-year changes 

to the supply chain structure, food expenditure patterns, and relative input 

and output commodity prices are refl ected in these data, unlike in the 

previous marketing bill series. Second, a precise approach to measuring 

and reporting the cost components of the entire food dollar in the new 

series avoids the potentially confusing divisions of the previous marketing 

bill series. For example, the new food dollar industry group series reports 

total energy industry costs per dollar of food expenditures, whereas the old 

marketing bill series only reported the electric and gas utility costs paid 

by a subset of food marketing establishments, such as processors, retailers, 

and restaurants. Third, the new food dollar series provides a more complete 

accounting of the modern global food system. Examples include (1) the 

1

The Offi ce of Management and Budget issued a Statistical Policy Directive 

in 2008 (Federal Register, Vol. 73, No. 

46 / Friday, March 7, 2008 / Notices), 

that provides guidance to Federal 

statistical agencies on the release and 

dissemination of statistical products. It 

stresses the need for adherence to data 

quality standards through equitable, 

policy-neutral, and timely release of 

information to the general public, and 

calls for “transparent descriptions of 

the sources and methodologies used to 

produce the data.”

Farm value Marketing bill

Figure 1

Farm share and marketing bill of the 2006 food dollar computed by 

the old method

Source: USDA, Economic Research Service.

3.5¢

38.5¢

8.0¢

4.0¢

3.5¢

4.5¢

4.0¢

3.5¢

4.0¢

2.5¢

1.5¢

3.5¢

19.0¢

Labor

Packaging

Transportation

Energy

Profits

Advertising

Depreciation

Rent

Interest

Repairs

Business taxes

Other costs

What a dollar spent on food paid for in 2006
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The new and expanded food dollar series uses different source data and 

estimation methods than the food marketing bill series that it replaces. The 

changes in methods lead to changes in some terminology. Although many of the 

key terms below have different meanings in other contexts, only the meaning 

germane to the context of this report is provided here. 

Farm share: Producer value of total annual farm commodity sales that are 

linked to annual food dollar expenditures, excluding farm commodities that are 

purchased directly or indirectly by other farm operations. Examples of exclusions 

are the purchase of hay by a cattle ranch (direct transaction) or purchase by a 

poultry farm of animal feed containing grains purchased by a feed mill from a 

feed-grain farm (indirect transaction).

Food dollar: Total annual market value for all purchases of domestically 

produced foods by persons living in the United States.

Food marketing bill: The market value of all post-farm processes of food 

dollar supply chain industries, measured as the difference between food dollar 

expenditures and farm share commodity sales. 

Imports: Food and non-food commodities that are imported from international 

sources and are used by U.S. food supply chain industries producing for the U.S. 

market.

Industry group: A collection, for accounting purposes, of establishments 

producing the same or similar output products, and of groups subcontracting to 

those establishments to support the production of output products.

Industry group value added: The compensation charged by all establishments 

in an industry group to buyers of their products for the services provided by the 

industry group’s primary factors of production.

Market value: Price paid by a consumer for the purchase of a consumer good.

Nominal value: The dollar value of products and/or services purchased or 

appraised, based on prevailing prices at the time of purchase or appraisal.

Output taxes: The value of excise, sales, property, and severance taxes 

(less subsidies), customs duties, and other non-tax Government fees levied 

on establishments.

Primary factors of production: Assets such as labor, machinery and equipment, 

physical structures, land and other natural resources, and intellectual property 

that are employed or operated by an industry group toward fulfi lling the demand 

for the industry product.

Producer value: Compensation received by producers for the sale of their 

products.

Real value: The dollar value of products and/or services purchased or appraised, 

based on prices prevailing during a specifi c time period.

Property income: The pre-tax income or capital gain accruing to owners of 

non-labor primary factors of production.

Salary and benefi ts: The pre-tax employee wages plus employer and employee 

costs for employee benefi ts.

Supply chain industry: Any industry dedicating resources and/or processes 

toward fulfi lling the demand for a product.

The New Food Dollar Series: A Glossary of Key Terms
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explicit measurement of the costs for internationally produced food and nonfood ingredients embodied in all domestically produced food commodities, 

(2) the explicit food dollar series accounts for food-at-home and food-awayfrom-home expenditures to assess the role of changes to these two distinct 

food market segments, and (3) the reporting of all food dollar series in both 

nominal and real (infl ation adjusted) values, to decompose the role of price 

and volume changes for goods and services embodied in our annual food 

expenditures. Each of these advantages to the new food dollar series are facilitated by the new source data and input-output analysis methods, and none 

of these features can be effectively measured using the old data sources and 

estimation procedures.
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A New Approach To Estimating 

and Presenting the Food Dollar

Input-output analysis is used to measure the food marketing bill, and supply 

chain analysis is used to measure the value-added components of the food 

dollar. To facilitate these new estimation procedures, a precise operational 

defi nition of food dollar expenditures and the farm share is established. 

Today’s food marketing system is globally integrated, with many food 

commodity supply chains having multistage production processes that 

produce several product and packaging varieties. For example, both domestic 

and imported wheat is milled in the United States and the fl our is widely used 

by bakeries, who in turn may incorporate fresh fruits and processed ingredients of both domestic and imported origins into their bakery products. In this 

and many other circumstances, clarity is needed for estimating the costs of 

marketing U.S. agricultural products, beginning with a concise defi nition of 

food dollar expenditures. We use the following defi nition:2

Food dollar expenditures are the annual purchases, by people living 

in the United States, of food products that (1) are produced on a U.S. 

farm and undergo no off-farm process beyond storage, transport, 

and basic packaging, or (2) are processed at a domestic food-manufacturing establishment.

As input to these food dollar purchases, farms produce commodities that are 

either directly consumed as foods or used as ingredients in processed foods. 

If we denote this farm production as the raw food dollar, then the farm share

and the food marketing bill are defi ned as follows:

 Farm share is measured as the average payment from each food 

dollar expenditure that farmers receive for their raw food dollar 

commodities. The food marketing bill is measured as the average 

value added to the raw food dollar from each consumer food dollar 

expenditure.

Accounting for Imported Ingredients 

in Domestically Produced Food

Domestically produced food commodities often rely on imported commodities to facilitate their production, and the food dollar series should include 

the value added from these imports.

Imported primary (farm fresh) and processed foods purchased by people 

living in the United States are not included in the proposed defi nition of food 

dollar expenditures. When used as ingredients by domestic food manufacturers, however, these imports must be treated as a food dollar expenditure. 

Otherwise, the exclusion of imported wheat used by a U.S. fl ourmill will 

erroneously lead to exclusion of domestic fruit fi lling used by a bakery that 

purchased the milled import wheat. Similarly, exclusion of imported fruit 

fi lling used by the same bakery will erroneously exclude domestic wheat in 

other fl our purchased by the bakery. 

2Purchases of food by domestic 

institutions for people in these institutions and food purchases by domestic 

employers for their employees are 

included. Commodities such as table 

salt and bottled water that have no farm 

ingredients are excluded.
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The commingling of imports in domestically produced foods is not limited 

to food ingredients. Products such as imported petroleum, fertilizers, and 

transportation equipment are used extensively by domestic establishments 

producing food. Among the food ingredients that are imported and sold in 

U.S. markets, those that are commingled with other ingredients and marketed 

as a product substantially different from the one entering the country are 

included in the ERS measures of food dollar expenditures, whereas imported 

food ingredients sold directly in fi nal markets do not enter into the measures.

Measuring Food Dollar Expenditures 

and the U.S. Farm Share

The fi rst step in the estimation process is to measure average food dollar expenditures and the farm share of those expenditures, using input-output analysis.

Input-output (IO) analysis facilitates the study of interdependencies, both 

among industries throughout an economy and between industry and fi nal 

market sales. In the IO framework, an “industry” is a group of establishments 

that produce similar products, and “fi nal market sales” are all sales of goods 

or services produced by industries and classifi ed into “commodity groups,” 

other than sales of goods or services for use by a domestic industry for the 

production of another commodity or service during the current accounting 

period. A food dollar expenditure is an example of a fi nal market sale. For IO 

analysis, three subaccounts make up the economic model:

1. A column vector y itemizes total fi nal market sales of C distinct 

commodities, each uniquely produced by one of the C distinct 

industry groups.

2. A column vector x itemizes total availability of domestic industry 

output plus imports for each of the C commodity groups.

3. A total requirement matrix, L, also known as the Leontief matrix, 

is a table with C columns and rows for each industry/commodity 

group, reporting average annual sales by each industry (such as grain 

farming) per dollar of fi nal market demand for each commodity 

(such as bakery products).

These three subaccounts are related by the simple matrix algebra identity, 

L · y = x, in which multiplication of the fi nal demand vector y by the total 

requirement matrix L exactly produces the industry output vector x. One 

convention of IO analysis is the assumption of linearly homogeneous production technologies. A linear technology implies, for example, that if 100 

bushels of wheat are required for 9,000 loaves of whole wheat bread sold to 

U.S. households, then 50 bushels are required for the 4,500 loaves sold to a 

subset of these households. 

Let S_fd denote a column vector that reports the share of each fi nal demand 

element in y that represents a food dollar expenditure, with the one exception that household purchases of imported foods are included in the share 

calculation.3 Next, with subscripts denoting the row and column dimensions 

of any matrix and with a defi ned as the set of all rows containing agricultural 

3Including household purchases of 

imported foods is necessary for the IO 

model to trace through the total farm 

sales linked to food dollar expenditures. These imported food purchases 

are deducted in a later step.
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industry/commodity groups, a measure of import-inclusive gross farm sales

associated with the food dollar expenditures is obtained as follows: 

(1) where fd fd fd

a a,C C C C C x L y , y S_ fd y =⋅ = ⋅

The fd superscript on xa in equation 1 is to indicate that the x vector is conditional to the multiplication of the fi nal demand vector y by the share vector 

S_fd. The  symbol above a vector indicates a conversion into a square 

diagonal matrix. This matrix algebra procedure facilitates row-to-column 

multiplication of commodity share values in S_fd with the corresponding 

commodity fi nal demand value in y.

Farm-to-farm payments must be netted out of the gross farm sales measured 

in equation 1. To explain, note that, in equation 1, gross farm industry sales 

include interindustry sales by the farm industry, some of which are direct 

and indirect farm-to-farm sales. For example, a feedlot operation purchases 

cattle from a ranch (direct) and animal feed from a feed manufacturer that, in 

turn, purchased grain from a grain farm (indirect). To avoid double counting 

intraindustry farm sales, one should net out all payments to a farm establishment that are passed on and subsequently go directly or indirectly to another 

farm establishment:

(2)   a

net fd fd

a a,a a,a a

farm to farm farm to farm

direct indirect

ˆ x x A A .x

-- --

æ ö ç ÷ ç ÷

ç ÷

÷

=- + ç ÷ ç ÷ ç ÷ ç ÷ ç ÷ ç ÷ ç ÷ è ø

Equation 2 indicates that the import-inclusive net farm sales equal gross farm 

sales minus the portion of these sales that were purchased by other farm 

establishments, either directly or through one or more nonfarm industry 

establishments. In equation 2, A

a,a is a matrix describing farm-to-farm direct 

transactions per dollar of output for each farm commodity, the A

a,a matrix 

with ^ above it describes total farm-to-farm indirect transactions per dollar of 

output for each farm commodity,4 and fd

a x is as defi ned in equation 1. 

To obtain the farm share measure, one must deduct household purchases 

of imported farm and processed food commodities from the import-inclusive food dollar and the subset of those purchases representing household 

purchases of imported farm commodities from the net farm sales measured 

in equation 2. By IO accounting convention, all commodity transactions are 

divided between domestic and imported sources in proportion to their total 

availability. If s_mc

 denotes the import share of available product for all 

commodities c  C, the farm share measure that is mandated by Congress is 

obtained as follows:

(3) ( ) C

net fd fd

a a aa C c C farm share i x S_m y i i S_m y é ù é ù =⋅ - ⋅  ̧ ⋅ - ⋅ ¢ ¢ ê ú ê ú ë û ë û

In equation 3, the numerator is a summation of import-exclusive net farm 

sales and the denominator is a summation of import-exclusive food dollar 

sales.5 A detailed mathematical derivation of the expressions used in equations 1 to 3 is provided in a technical appendix to this report.

4A formal derivation of the farmto-farm indirect matrix is provided in 

the appendix (see equations A29 and 

A30).

5In this context, “import-exclusive” 

indicates the deduction of imported 

food dollar purchases. The numerator 

in equation 3 deducts sales of only raw 

(farm fresh) food commodities such 

as imported fresh produce, and the 

denominator in the equation deducts 

all imported food dollar sales.
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Annual Food Dollar Estimation Model

The second step is to appropriate data sources to carry out annual estimation of these data series.

The Bureau of Economic Analysis (BEA) publishes a detailed benchmark 

U.S. input-output table in 5-year intervals, with a 5-year lag between data 

enumeration and public release of the IO tables (www.bea.gov/industry). 

Because of their close link to survey-based primary source data and their 

detailed industry coverage, the BEA benchmark accounts provide the most 

complete source of information for compiling estimates of equations 1 to 3. 

The two most recent BEA benchmark IO table releases cover the years 2002 

and 1997 and are largely based on the Economic Census data enumerated in 

those years. After some aggregation of the 1997 and 2002 BEA benchmark 

accounts to ensure a one-to-one matching of industry groupings, the benchmark tables cover 392 industries.

The Bureau of Labor Statistics (BLS) provides annual input-output tables that 

are based on the structural matrix of the most recent BEA detailed benchmark IO table (www.bls.gov/emp/ep_data_input_output_matrix.htm). The 

current BLS annual IO accounts cover calendar year economic fl ows of the 

U.S. national economy for 1993 to 2008, and the accounts are reported in 

both nominal (current-year) and constant (infl ation-adjusted) dollars. Industry 

output of goods and services is broken into 202 distinct commodity groups, 

and personal consumption expenditures on food are distinguished by category of purchase.6 For the present analysis, these categories are broken out 

into two groups: food and beverages purchased for off-premises consumption 

(food-at-home), and all other food consumption expenditures (food-away). 

Examples of food-at-home expenditures include (but are not limited to) 

food purchased at grocery stores, farmers’ markets, or nontraditional food 

retailers such as convenience stores. Examples of “food-away” expenditures 

include (but are not limited to) food purchased at restaurants, sports arenas, 

supplied by employers to employees, and supplied in domestic institutions, for 

example, school lunches. 

The approach in this report is to update the food marketing bill measure obtained 

from the 2002 detailed benchmark table for the years 2003 to 2008, using the 

BLS annual IO tables, and to “back-cast” the food marketing bill measure 

obtained from the 1997 detailed benchmark table for the years 1993 to 1996. 

For the years 1998 to 2001, an indexing procedure is employed that captures the 

relative year-to-year changes in the food marketing bill between 1997 and 2002, 

as measured by the annual BLS data, while ensuring that the benchmark year 

estimates are replicated in the index of the BLS series (see Kuchler and Burt, 

1990). Documentation of the data development work and the estimation model 

is provided in the technical appendix to this report. Documentation of inputoutput data sources and concepts is available from BEA at www.bea.gov/scb/

pdf/2009/06%20June/0609_indyaccts_primer_a.pdf .

Historically, alcoholic beverages and soft drinks have not been included in food 

marketing bill estimates; however, commodities such as wine grapes, hops, and 

cane sugar are major U.S. crops. Recognizing that certain beverage products 

such as diet soft drinks use little if any farm commodities, the present analysis 

nonetheless includes a separate food and beverage dollar series. 

6Annual updates by BLS of the BEA 

2002 benchmark IO account (aggregated to about 200 commodity/industry 

groups) are obtained from annual GDP 

data and gross industry output data, 

converted to chain-weighted year 2000 

dollars based on consumer price index 

(CPI) and producer price index (PPI) 

statistics. An effi cient information 

processing algorithm know as “RAS” 

is used to update the benchmark technical coeffi cients for consistency with 

the new (survey-based) GDP and gross 

industry output data (www.bls.gov/

emp/ep_projections_methods.htm).
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Farm Share and Food Marketing Bill Estimates: 

1993 to 2008 

In the third step, the farm share and food marketing bill series are compiled 

and analyzed.

Figure 2 presents the 2006 food dollar decomposed into farm share (14.2 

cents) and food marketing bill (85.8 cents) components. A comparison with 

fi gure 1 highlights two important differences between the revised and the old 

food marketing bill series. In the 2006 depiction in fi gure 1, the former series 

reports a larger farm share value. The result holds true for each year with 

overlapping measures. The new and the old series use different data sources, 

which partly explains why the results are different. Beyond this, the step 

outlined in equation 2 in the new input-output-based estimates, netting out of 

farm-to-farm direct and indirect transactions, accounts for most of the difference between the old and new farm share estimates over the 1993 to 2006 

period where the two series overlap. Farm-to-farm transactions amount to a 

double-counting of farm sale proceeds of each food dollar, so it is appropriate 

Farm share Marketing share

15.8¢ 84.2¢

Farm share Marketing share

Figure 2

Farm share and marketing share of the food dollar computed 

by the new method

2006 Marketing bill

Source: USDA, Economic Research Service.

14.2¢ 85.8¢

2008 Marketing bill
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to adjust for them. The IO accounts provide a systematic means of making 

these adjustments.

Table 1 reports the estimated farm share and food marketing bill for the U.S. 

nominal food dollar and the nominal food and beverage dollar, for the period 

1993 to 2008, using the new methodology. For the most part, the two series 

(food versus food and beverage) differ only in levels, with similar year-toyear percentage changes over the study period. For this reason, only the more 

traditional food dollar series is discussed below.

In 1993, the farm share of total food dollar expenditures was 18.4 cents, and 

for the next 4 years it hovered around 18 cents. Beginning in 1998, the farm 

share of total food dollar expenditures began to decline, reaching 15.3 cents 

on the food dollar by 2002, a 17-percent drop from the 1998 level. With the 

exception of 2006 (after the fi rst 2-year decline in farm producer prices in the 

decade), the 2002 farm share represents a bottoming out of this series over 

the study period.

The farm share of food-away-from-home expenditures started to decline in 

1998, and, by 2002, this share had fallen to 4.8 cents, or half of its 1996 level. 

For the most part, the 2002 farm share of food-away-from-home expenditures 

represents a bottoming out, with the exception of a sharp drop in 2006 to 4.1 

percent, which is the lowest measured level over the study period for both the 

nominal food dollar and the nominal food and beverage dollar.

Although the farm share of at-home food expenditures does fall off slightly from 

1998 to 2002, the series remains above 22 percent and below 24 percent over the 

study period, with the exception of the fi rst (1993) and fi nal (2007-08) 2 study 

Table 1

Marketing bill and farm share of the U.S. nominal food dollar, 1993 to 2008

Food dollar Food & beverage dollar*

Total Food at home Food away Total Food at home Food away

Farm 

share

Market

bill

Farm 

share

Market

bill

Farm 

share

Market

bill

Farm 

share

Market

bill

Farm 

share

Market

bill

Farm 

share

Market

bill

Percent

1993 18.4 81.6 24.6 75.4 10.5 89.5 16.2 83.8 20.1 79.9 10.1 89.9

1994 17.6 82.4 23.4 76.6 9.6 90.4 15.3 84.7 19.1 80.9 9.1 90.9

1995 18.1 81.9 23.9 76.1 9.7 90.3 15.6 84.4 19.6 80.4 9.0 91.0

1996 17.9 82.1 23.3 76.7 9.6 90.4 15.2 84.8 19.1 80.9 8.5 91.5

1997 17.8 82.2 23.3 76.7 9.4 90.6 15.1 84.9 19.1 80.9 8.5 91.5

1998 17.0 83.0 22.7 77.3 8.2 91.8 14.4 85.6 18.6 81.4 7.3 92.7

1999 16.2 83.8 22.3 77.7 6.9 93.1 13.8 86.2 18.2 81.8 6.1 93.9

2000 15.9 84.1 22.3 77.7 6.2 93.8 13.5 86.5 18.2 81.8 5.5 94.5

2001 15.5 84.5 22.1 77.9 5.5 94.5 13.1 86.9 18.0 82.0 4.9 95.1

2002 15.3 84.7 22.1 77.9 4.8 95.2 12.8 87.2 18.1 81.9 4.1 95.9

2003 15.4 84.6 22.3 77.7 5.1 94.9 12.9 87.1 18.2 81.8 4.5 95.5

2004 15.4 84.6 22.8 77.2 5.0 95.0 13.2 86.8 18.5 81.5 4.6 95.4

2005 15.3 84.7 22.5 77.5 5.0 95.0 13.0 87.0 18.3 81.7 4.5 95.5

2006 14.2 85.8 22.2 77.8 4.1 95.9 12.6 87.4 17.9 82.1 4.1 95.9

2007 15.8 84.2 24.0 76.0 4.8 95.2 13.7 86.3 19.4 80.6 4.6 95.4

2008 15.8 84.2 24.3 75.7 4.7 95.3 14.0 86.0 19.7 80.3 4.6 95.4

*Includes soft drinks and alcoholic beverages.

Source: USDA, Economic Research Service.
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years. In these 3 years, the farm share of at-home food expenditures was in the 

low- to mid-24-cent range. 

These results present a compelling case that the growing costs and expenditures of eating out are behind the downward trend in the farm share value 

over the study period. Under this interpretation of the data, the added costs 

of food preparation and cleanup services in foodservice establishments are 

driving up the marketing share and driving down the farm share.

To further examine farm share trends over the study period, we compiled 

the farm share series in constant (infl ation-adjusted) year 2000 prices. 

Calculations of food dollar expenditures and farm commodity sales associated with these expenditures are compiled as if all transaction prices were 

fi xed at year 2000 levels. Year 2000 estimates will thus be identical to those 

reported in table 1, whereas estimates for prior and subsequent years will 

refl ect changes in volumes of purchased food and farm commodities, holding 

prices constant.7 Table 2 reports these results. 

Between 1993 and 2000, the farm share measure in constant 2000 prices 

declined at a lower rate than did the nominal measure. This lower rate of 

decline implies that overall nominal farm commodity prices were falling 

relative to the prices of goods and services used for marketing these farm 

commodities to U.S. households. However, starting in 2002, the overall 

nominal price farm share began to rise relative to the real (infl ation-adjusted) 

measure, implying that farm commodity prices over this period were rising 

relative to the prices for food marketing bill goods and services. This rise 

became more pronounced in 2006 to 2008, coinciding with the upturn in the 

nominal farm share during this period.

Decomposing the real farm share measure into at-home and food-away 

expenditures shows that the pre-2000 price trends for farm commodities and 

for food marketing bill goods and services generally moved together for the 

at-home expenditures over the 1993 to 2000 period, leading to very similar 

trends in both the nominal (table 1) and real (table 2) farm share measures 

over this period. The food marketing bill prices for food-away increased 

sharply relative to farm commodity prices over this interval. After 2000, farm 

commodity prices began to gain on food marketing bill prices for at-home 

food purchases, while food-away marketing bill prices continued to increase 

relative to the price of farm commodities through 2003. After 2003, farm 

commodity price increases started outpacing the price of the food marketing 

bill goods and services for food-away expenditures.

Taken together, the nominal and real farm share measures demonstrate that 

relative prices are important in shaping the farm share measure but are not the 

only factor. For example, although farm commodity prices began rising faster 

than the overall price for food-away marketing bill commodities, the nominal 

farm share of the food-away dollar trended lower over this interval, except in 

2007, when the farm share rose after a sharp decline in 2006. The declining 

farm share in the face of rising farm commodity prices indicates that the 

volume of food-away services was increasing, possibly due to the foodservice 

category’s declining relative price. If consumers are eating out more, higher 

farm commodity prices can coincide with a lower farm share measure due to 

the added food services purchased per dollar of food expenditures. Further, 

7“Volume” in this context is not the 

same as units or quantity, since different factors such as quality, production 

recipe, and production technologies 

can change over time for any given 

commodity.
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even if the relative prices for farm commodities and food marketing services 

remain constant, growth in the share of away-from-home food expenditures 

would lower the overall farm share measure, since the food-away farm share is 

substantially lower than the food-at-home farm share. 

The prices referred to in the comparisons between nominal and real (infl ation-adjusted) farm share measures represent the implicit per unit costs of 

a bundle of commodities purchased over the course of a year. Unlike fi xed 

food basket price indexes, this bundle can change over time. For at-home 

expenditures, a household may change the specifi c products purchased within 

each commodity group, such as by buying more organic brands or purchasing 

more food-preparation services like pre-marinated meats. For away-fromhome food expenditures, a household may change food-away destinations 

from limited-service to full-service establishments. Each of these examples 

can have food price implications that do not conform to the conventional 

notion of price infl ation, but are instead caused by year-to-year changes in the 

product mix purchased within each commodity group. These cost-based price 

measures should not be confused with conventional commodity price indexes.

When BLS reports its annual indexes of consumer food prices and producer 

commodity prices, its measure explicitly controls for product-mix changes. By 

using a fi xed basket of food products, the BLS index of prices avoids factors 

such as the introduction of marinated beef or a shift from limited-service to 

full-service restaurants. The importance of price comparisons under the two 

approaches is demonstrated in fi gure 3, which reports the BLS annual indexes 

of consumer food prices for at-home and food-away expenditures from 1993 

to 2008. The fi gure also reports a total farm commodity (food and nonfood) 

producer price index (PPI) over the same interval. These price indexes support 

Table 2

Marketing bill and farm share of the U.S. real food dollar, 1993 to 2008

Food dollar Food & beverage dollar*

Total Food at home Food away Total Food at home Food away

Farm 

share

Market

bill

Farm 

share

Market

bill

Farm 

share

Market

bill

Farm 

share

Market

bill

Farm 

share

Market

bill

Farm 

share

Market

bill

Percent

1993 17.1 82.9 22.9 77.1 8.5 91.5 14.7 85.3 18.9 81.1 7.8 92.2

1994 15.3 84.7 20.6 79.4 7.2 92.8 13.1 86.9 16.9 83.1 6.6 93.4

1995 16.2 83.8 21.9 78.1 7.5 92.5 13.9 86.1 18.0 82.0 6.9 93.1

1996 17.0 83.0 22.4 77.6 8.3 91.7 14.2 85.8 18.3 81.7 7.2 92.8

1997 16.3 83.7 21.6 78.4 8.0 92.0 13.8 86.2 17.7 82.3 7.1 92.9

1998 16.1 83.9 21.6 78.4 7.6 92.4 13.5 86.5 17.7 82.3 6.6 93.4

1999 16.1 83.9 22.1 77.9 6.8 93.2 13.6 86.4 18.1 81.9 6.0 94.0

2000 15.9 84.1 22.3 77.7 6.2 93.8 13.5 86.5 18.2 81.8 5.5 94.5

2001 15.8 84.2 22.2 77.8 6.0 94.0 13.3 86.7 18.0 82.0 5.3 94.7

2002 14.6 85.4 20.7 79.3 5.1 94.9 12.2 87.8 16.9 83.1 4.4 95.6

2003 15.0 85.0 21.2 78.8 5.7 94.3 12.6 87.4 17.3 82.7 4.9 95.1

2004 14.8 85.2 21.5 78.5 5.4 94.6 12.6 87.4 17.3 82.7 4.9 95.1

2005 14.2 85.8 20.5 79.5 5.0 95.0 12.0 88.0 16.6 83.4 4.5 95.5

2006 12.9 87.1 20.1 79.9 3.9 96.1 11.7 88.3 16.2 83.8 4.1 95.9

2007 13.9 86.1 20.2 79.8 5.4 94.6 12.1 87.9 16.3 83.7 5.1 94.9

2008 13.9 86.1 21.5 78.5 4.3 95.7 12.4 87.6 17.2 82.8 4.3 95.7

*Includes soft drinks and alcoholic beverages.

USDA, Economic Research Service.
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the IO analysis fi nding that the farm share of food dollar expenditures 

increased substantially in 2007 and 2008 due to higher farm commodity 

prices; however, the BLS price indexes also show very little difference in the 

year-to-year changes to at-home versus food-away food prices. The BLS data 

appear to contrast with the results in table 1 that indicate that the food-away 

marketing bill share of the food dollar increased throughout most of the study 

period while the food-at-home-share remained roughly constant.

The divergence between the BLS data and the ERS data in table 1 can 

be explained by several possible trends. If the bundle of food-away meals 

purchased by U.S. food consumers changed during this period, with 

consumers buying more food and/or services with higher marketing margins, 

this change would be refl ected in the farm share measure but would not 

immediately show up in the fi xed-bundle price indexes. In addition, farm 

commodity producer prices paid by the foodservice industry may have 

declined relative to the prices paid by food retailers, which can occur in the 

absence of overall changes to the price of farm commodities. To examine 

this issue more closely, a new approach to measuring the components of food 

dollar expenditures is introduced in the next section.

Figure 3

Index of farm and food commodity prices, 1993-08

Index 1992-84=100

PPI = Producer Price Index; CPI = Consumer Price Index.

Source: Bureau of Labor Statistics, U.S. Department of Labor.

1993 95 97 99 2001 03 05 07

0

50

100

150

200

250

PPI farm products

CPI Food at home

CPI Food away
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Components of the Food Dollar

In the next step, we use supply chain analysis to trace the market value of 

total food dollar expenditures back to the sources of value added and to the 

assets employed by participants in the food dollar supply chain.

Within the IO accounting framework, the market value of all fi nal market 

sales, including all food dollar expenditures, is exactly equal to the sum 

total of all value added by every industry that is either directly or indirectly 

linked to the commodity supply chain. This result is simple to demonstrate by 

recalling that equation 1 identifi es the gross outputs of all industries directly 

and indirectly linked to the import-inclusive food dollar expenditures. 

Multiplying both sides of equation 1 by the inverse of the Leontief matrix, 

and noting that inverting the Leontief matrix and summing the resulting 

matrix down each column produces a row vector of industry value-added 

coeffi cients, v_m, gives the following:8

(4) 

fd fd

C C C C

summation of summation of

value added to food dollar import-inclusive food

across all C industries dollar expenditures

v_m x i y ¢ ¢ ⋅ =⋅  

In this expression, the a subscript used in equation 1 was replaced by the 

C subscript, since all industry contributions to market value are studied in 

the present context, not just the farm share. Although equation 4 precisely 

gives the value contribution of all industries supporting the food dollar 

supply chain, this turns out to be too much information; most of the roughly 

400 industries in the BEA detailed benchmark IO accounts, and roughly 

200 industries in the annual BLS IO accounts, either directly or indirectly 

contribute some value to the production of food. The challenge is how to 

process this information in a way that informs our understanding of how 

value accumulates along the supply chain, from the production and application of farm inputs to the purchase of food products by or for U.S. households, as well as to show how this process changes from year to year.

A matrix reduction procedure in IO analysis (see chapter 3 in Leontief, 

1986) to facilitate supply chain studies is suited for precisely this type of 

problem. Developed in the 1960s to facilitate a supply chain study of the U.S. 

metalworking industries, the original application identifi ed four branches 

of production belonging to the metalworking industry group. Using precise 

mathematical computations, all industries not identifi ed with these branches 

of production—here we use the term supply chain (SC) industries—were 

eliminated, but their value-added contributions were exactly allocated to the 

SC industries in proportion to the materials and services supplied. It is useful 

to refer to these non-SC industries as subcontracting establishments.

A simple aggregation of key industry groups that comprise the food supply 

chain industries can provide direct measurements of the value added to the 

food dollar by each group. A substantial portion of the value from each food 

dollar expenditure, however, is produced by numerous other industries that 

support some or all of the identifi ed supply chain industries. The wholesale 

trade industry is a case in point. Agribusiness wholesalers, grocery wholesalers, and foodservice wholesalers provide supplies and services to three 

8The row vector “v_m” measures 

the average import-inclusive value 

added per dollar of industry output 

from the employment of industry assets 

(e.g., hired labor, machinery, physical structures, natural resources). The 

value added equals 1 minus the sum of 

all purchased-input coeffi cients, which 

equals iL-1.
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very distinct food supply chain groups. The role and structure of each of 

these three wholesale industry groups has evolved differently over time, and 

the groups are more closely allied to their industry clients than to each other. 

The matrix reduction procedure introduced in this section is a systematic 

approach to measure these relationships, whereas a simple aggregation of the 

wholesale trade industry would obscure the relationships.

To state this measure formally, let S denote the set of M different supply 

chain industry groups that facilitate production and delivery of food 

commodities to U.S. households, such that S = {s1,s2,...,sM}. Let v_m* 

denote the reestimated value-added coeffi cients representing only the 

supply chain industries, but also refl ecting the combined value-added coeffi cients of their subcontracting industries. Equation 4 is then modifi ed for 

the reduced food supply chain IO system and to refl ect the deduction of 

household import food expenditures, as follows: 

(5) 

 

 ( ) 

*' fd_net fd_net

S S S

fd_net fd fd

SS S S

fd_net fd '

S S S S

v_m x y ,

where : x x S_m y ,

and : y i S_m y .

⋅ =

=- ⋅

=- ⋅

Each product of a supply chain value-added coeffi cient and its corresponding 

net industry output represents the value contribution of the specifi c supply 

chain industry. Dividing each element-wise product by the summation on 

the right in equation 5 produces the value contributions of each supply chain 

industry, and its subcontractors, to each food dollar expenditure:

(6) * fd_net fd_net

S S S industry group value added food dollar v_m x y - =⋅  ̧

Industry Group Value-Added Composition 

of the Food Dollar

To carry out the supply chain analysis, supply chain industries are clustered 

into 10 industry groups, based on their contributions to the different stages 

of food production or to key food supply chain services.

The following supply chain industry groupings were selected:

 1. Farm and agribusiness

 2. Food processing

 3. Food retailing

 4. Foodservices (restaurants and other establishments serving food 

away from home)

 5. Transportation

 6. Energy 

 7. Packaging

 8. Finance and insurance

 9. Advertising

10. Legal, accounting, and bookkeeping
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Figure 4 summarizes the value-added components of the 2006 food dollar 

by industry group, as formally stated in equation 6, to facilitate a comparison 

with 2006 cost-component measures from the old food marketing bill series 

reported in fi gure 1. Under the new IO-based food dollar series, a complete 

accounting of each supply chain industry group’s contribution to the value of 

food purchases is measured and reported. This facilitates a more informative account of the roles and impacts of the different industry groups in the 

Figure 4

Industry group value-added shares of the food dollar

2006 industry group value-added

Source: USDA, Economic Research Service.

Farm & agribusiness

Food processing

Packaging

Transportation

Retail trade

Food services

Energy

Finance & insurance

Other

Farm & agribusiness

Food processing

Packaging

Transportation

Retail trade

Food services

Energy

Finance & insurance

Other

4.0¢

3.5¢

4.4¢

3.8¢

13.6¢

33.7¢

6.8¢

11.6¢

18.6¢

4.1¢

3.8¢

4.0¢

4.1¢

13.7¢

34.9¢

5.8¢

10.7¢

“Other” comprises advertising (2.0¢) and legal and accounting (1.8¢).

“Other” comprises advertising (2.4¢) and legal and accounting (1.6¢).

2008 industry group value-added

18.9¢
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formation of food market values and the effects of the industries on producer 

prices of food commodities. For example, consider the segments labeled 

“Energy” in fi gures 1 and 4. Under the old food marketing bill series (fi gure 

1), the energy segment represented the average costs per food dollar expenditure for electricity, natural gas, and other fuel purchases by food processing, 

wholesaling, retailing, and foodservice establishments. Energy costs of the 

farm and agribusiness, transportation, and packaging industries, for example, 

are not refl ected in the 3.5-cent energy segment in this fi gure. In fi gure 4, the 

same 2006 food dollar reported 5.8 cents of energy per food dollar expenditure, because this larger measure incorporates the energy value of every food 

dollar supply chain industry. This is part of the reason the transportation and 

packaging industry groups show smaller segments in fi gure 4 than in fi gure 1. 

Both transportation and packaging are energy-intensive industries, and when 

the value of energy used by these groups is deducted from their contribution 

to the food dollar, their contributions noticeably decline. The same reasoning 

applies to each industry group reported in fi gure 4. For example, any packaging, fi nance and insurance, and transportation service costs incurred by 

each of the other supply chain industry groups are not refl ected in the value 

contributions of those industries, but are instead consolidated into the appropriate industry group segment. 

Another informative comparison is between the farm share segment in fi gure 

2 and the farm and agribusiness value-added segment in fi gure 4. In fi gure 4, 

farm and agribusiness value-added contributions to the food dollar that trace 

back to other supply chain industry groups, such as energy and transportation, are deducted from the farm share value reported in fi gure 2 in order to 

arrive at the farm and agribusiness value-added contribution. For 2006, these 

energy, transportation, and other services amounted to 3.5 cents (14.2 - 10.7) 

of each food dollar. The remaining 10.7 cents represents value contributions 

of the industry assets employed by farm and agribusiness establishments to 

support the production of farm commodities.

Primary Factor Return Composition 

of the Food Dollar

The next step is to distribute industry value-added proceeds to the owners of 

the primary factors employed by industry.

Each industry produces a product by a process that typically involves 

purchasing output products of other industries (intermediate inputs) and then 

employing its own industry assets to use these intermediate inputs to produce 

a new and different output. The industry assets are the primary factors of 

production that add value to the intermediate products purchased from other 

industries. In IO accounts, industry value added is recorded as income and 

is allocated as returns to primary factors as follows (type of payments to the 

factor owners in parenthesis):

a) Domestic hired labor (salary and benefi ts)

b) Domestic industry capital (returns to capital;9 taxes on output10)

c) International assets11 (international payments)

9Represents pre-income tax payments to capital owners, including 

property, plant, and equipment.

10Includes excise/sales/property/severance taxes, customs duties, and other 

fees and assessments, and deducts 

subsidies.

11Import commodity proceeds cannot be traced back to foreign labor 

and capital markets by industry group, 

so these proceeds are valued at their 

import prices and treated as returns to 

nondomestic industry assets.
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With the exception of imports, the BLS annual IO accounts do not itemize 

industry value added, but report the combined value added by food supply 

chain industries. BEA annual IO accounts provide this detailed breakout 

beginning in 1997, and the information is incorporated for the available years 

(see appendix for detailed explanation). 

BEA annual data are used to measure the primary factor value-added food 

dollar, obtained by a restatement of equation 6 with the addition of a second 

subscript, p, defi ned over each type of primary factor v_mS,P (see equation 

A35 in the appendix for a formal statement of this measure):

(7) . * fd_net fd_net

P,S S S primary factor value added food dollar v_m x y = ⋅ ̧

Figure 5 summarizes the allocation of the 2006 food dollar into total 

payments to primary factors of production, obtained from application of 

equation 7 to the 2006 IO data. A comparison of the salary and benefi ts 

segments in fi gure 5 with the labor segment of the old food marketing bill 

series (fi gure 1) again reveals a stark contrast. In the present analysis (fi g. 5), 

Figure 5

Primary factor return shares of the food dollar

2006 primary factor value-added

Source: USDA, Economic Research Service.

2008 primary factor value-added

7.8¢ 8.4¢ 33.0¢ 50.8¢

Imports Salary and benefits Property income

Output

 taxes

7.0¢ 7.9¢ 31.9¢ 53.2¢

Imports Salary and benefits Property income

Output

 taxes
19

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Economic Research Service/USDA

salary and benefi ts include all domestic labor compensation for work toward 

fulfi lling the demand for all food dollar purchases. Figure 5 indicates that 

slightly over half of every food dollar expenditure covers salaries and benefi ts 

of U.S. workers. Previously, labor excluded farm and agribusiness labor earnings (fi g. 1), since only food marketing bill cost components were measured. 

The old series also had gaps in the measurement of labor earnings in other 

supply chain industries, including those for some transportation and manufacturing industry workers. These differences resulted in the substantially lower 

reported labor earnings per food dollar in fi gure 1. 

Analysis of Industry Group Primary Factor 

Returns: 1993 to 2008

The next steps measure changes to the value composition of food dollar 

expenditures over time to assess changes to the structure of the food system 

and the composition of food expenditures.

A more informative allocation of the food dollar market value is by a crosstabulation of industry group value added by the primary factor group. This 

is obtained by conversion of the net industry output vector in equation 7 to a 

diagonal matrix:

(8) . * fd_net fd_net

P,S S S cross tabulation value added food dollar v_m x y - = ⋅ ̧

Table 3 reports the computation of equation 8 using data on U.S. total, 

at-home, and food-away nominal food dollar expenditures from 1993 to 2008. 

Results are reported for each primary factor return and total return to assets 

and for all industries combined. Results are also itemized for each of the 10 

supply chain industry groups, for a total of 165 categories. Table lines are 

numbered for ease of reference. 

Overall, the salaries of U.S. workers accounted for the highest portion of the 

food dollar among primary factor returns (table 3, line 2). Returns to workers 

comprise wages, salaries, and benefi ts, such as both employer and employee 

contributions to pension and insurance funds, and include all income and 

wage taxes (State and Federal) on these salaries. In 1997, the salaries of U.S. 

workers accounted for half of total food dollar expenditures. This amount 

climbed 10 percent by 2001, reaching about 55 cents of every food dollar 

spent, on average, but had fallen back to 51 cents by 2008. Among supply 

chain industry groups, foodservice workers accounted for the largest share 

of salary and benefi ts, reaching nearly 22 cents of the total food dollar in 

2006 (table 3, line 32). Most of the supply chain industry groups mirrored 

the overall trend of increasing labor returns from the late 1990s into the early 

2000s, followed by a dropping off through 2008. A notable exception to this 

trend was farming and agribusiness labor, where labor returns per food dollar 

expenditure generally declined throughout the study period, from a high of 

about 4 cents in 1997 to a low of 2.8 cents in 2007 (table 3, line 7). 

Industry capital, or property, has the next highest primary factor returns per 

food dollar expenditure, ranging between 32 and 36 cents for the average 

dollar spent on food between 1997 and 2008 (table 3, line 3). Property 

incomes were at their highest share (35.8 cents) of overall food dollar expen-
20

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Economic Research Service/USDA

Table 3

Cost components of the U.S. nominal food dollar, 1993 to 2008

Primary 

factor cost

1990s 2000s

93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08

Total food dollar

All industries

1. Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

2. Labor 50.0 53.9 53.8 54.6 54.9 54.7 53.4 53.4 52.9 53.2 51.3 50.8

3. Property 35.8 33.3 34.0 32.6 32.8 32.3 33.5 32.7 32.8 31.9 33.2 33.0

4. Taxes 9.0 7.6 6.8 6.7 6.7 7.6 7.4 7.7 7.3 7.9 8.1 8.4

5. Imports 4.7 4.6 5.3 5.3 5.1 5.2 5.4 6.0 5.6 5.5 5.7 6.2 7.0 7.0 7.4 7.8

Farm and agribusiness

6. Total 14.5 14.0 14.4 14.1 14.1 13.5 12.9 12.4 12.0 11.8 11.9 11.6 11.3 10.7 11.8 11.6

7. Labor 4.0 3.9 4.0 3.9 3.8 3.9 3.4 3.0 3.0 3.0 2.8 2.9

8. Property 7.6 8.2 8.3 8.0 7.6 6.8 7.6 7.3 7.4 6.5 7.3 7.0

9. Taxes 1.1 0.0 -0.7 -0.8 -0.6 0.1 -0.2 0.2 -0.4 0.0 0.4 0.3

10. Imports 1.3 1.2 1.5 1.4 1.5 1.4 1.4 1.3 1.1 1.1 1.1 1.1 1.2 1.2 1.3 1.4

Food processing

11.Total 21.7 22.6 22.5 23.4 23.6 23.4 22.7 21.7 21.6 21.3 20.9 20.3 20.4 18.9 19.0 18.6

12. Labor 11.8 13.9 13.0 13.0 12.7 12.7 12.2 12.5 12.6 11.8 11.2 10.9

13. Property 9.1 7.2 7.5 6.6 6.9 6.7 6.7 5.8 5.7 5.2 5.8 5.6

14. Taxes 1.5 1.1 1.0 1.0 0.9 1.0 1.0 0.9 1.0 0.9 0.9 0.9

15. Imports 1.1 1.1 1.2 1.3 1.2 1.2 1.2 1.2 1.1 1.0 1.0 1.1 1.1 1.0 1.2 1.2

Packaging

16. Total 4.7 4.8 5.2 5.0 4.7 4.8 4.8 4.7 4.7 4.7 4.5 4.3 4.3 4.1 4.1 4.0

17. Labor 2.3 2.3 2.3 2.3 2.4 2.3 2.3 2.0 1.9 1.8 1.8 1.8

18. Property 1.3 1.3 1.3 1.3 1.2 1.2 1.1 1.2 1.1 1.1 1.0 1.0

19. Taxes 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.2 0.1 0.1 0.1

20. Imports 0.8 0.8 1.0 1.0 0.8 0.9 1.0 1.0 1.0 1.0 1.0 1.1 1.1 1.1 1.1 1.1

Transportation

21.Total 4.5 4.6 4.5 4.5 4.4 4.4 4.3 4.1 4.0 4.0 3.8 3.8 3.8 3.8 3.5 3.5

22. Labor 2.5 2.7 2.6 2.5 2.5 2.4 2.3 2.2 2.2 2.1 1.9 2.0

23. Property 1.4 1.4 1.3 1.2 1.2 1.2 1.2 1.2 1.3 1.3 1.2 1.1

24.Taxes 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

25. Imports 0.2 0.2 0.2 0.2 0.3 0.2 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2

Retail trade

26. Total 13.9 14.3 14.4 14.7 14.6 14.4 14.5 14.2 14.2 14.4 14.6 14.0 14.3 13.7 13.8 13.6

27. Labor 8.3 8.0 8.1 8.1 8.1 8.2 8.1 7.6 7.7 7.3 7.4 7.5

28. Property 3.8 3.4 3.4 3.1 3.1 3.3 3.6 3.4 3.6 3.5 3.5 3.2

29. Taxes 2.2 2.7 2.7 2.7 2.6 2.6 2.7 2.6 2.7 2.7 2.7 2.6

30. Imports 0.2 0.2 0.2 0.3 0.2 0.3 0.3 0.3 0.3 0.2 0.3 0.3 0.3 0.3 0.3 0.3

Foodservice

31.Total 28.3 27.9 27.5 26.6 27.0 27.6 28.5 29.4 30.0 30.4 30.9 32.3 31.5 34.9 33.3 33.7

32. Labor 16.3 17.7 18.1 18.8 19.3 19.3 19.5 20.4 19.8 21.8 20.6 20.3

33. Property 7.5 6.8 7.1 7.2 7.4 7.8 8.0 8.4 8.1 9.1 8.8 9.2

34. Taxes 3.0 2.6 2.7 2.8 2.8 2.8 2.9 3.0 3.0 3.3 3.1 3.4

35 Imports 0.4 0.4 0.4 0.5 0.3 0.5 0.6 0.6 0.6 0.5 0.5 0.6 0.6 0.7 0.7 0.8

—continued
21

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

Economic Research Service/USDA

Table 3

Cost components of the U.S. nominal food dollar, 1993 to 2008—Continued

Primary 

factor cost

1990s 2000s

93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08

Total food dollar

Energy

36. Total 5.0 4.6 4.3 4.4 4.2 3.9 4.1 4.8 5.0 4.9 5.1 5.2 6.2 5.8 6.2 6.8

37. Labor 1.1 1.1 1.2 1.2 1.3 1.3 1.1 1.1 1.2 1.0 1.1 1.3

38. Property 1.9 1.9 1.9 2.1 2.2 2.0 2.1 2.1 2.4 2.1 2.3 2.3

39. Taxes 0.5 0.4 0.4 0.4 0.4 0.5 0.4 0.4 0.4 0.4 0.4 0.6

40. Imports 0.6 0.6 0.6 0.6 0.7 0.4 0.6 1.0 1.0 1.2 1.4 1.7 2.2 2.2 2.3 2.5

Finance and insurance

41. Total 3.7 3.6 3.5 3.6 3.7 3.9 4.1 4.3 4.3 4.2 4.0 4.1 4.0 3.9 4.1 4.3

42.Labor 1.7 2.1 2.3 2.4 2.3 2.3 2.2 2.2 2.2 2.1 2.3 2.3

43. Property 1.7 1.6 1.6 1.7 1.7 1.8 1.7 1.7 1.7 1.6 1.7 1.8

44. Taxes 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2

45. Imports 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Advertising

46. Total 2.4 2.3 2.4 2.5 2.6 2.7 2.7 2.7 2.5 2.4 2.4 2.4 2.3 2.3 2.3 2.0

47. Labor 1.4 1.5 1.5 1.6 1.5 1.4 1.3 1.3 1.3 1.3 1.2 1.1

48. Property 1.0 1.0 1.0 0.9 0.9 0.9 0.9 1.0 0.9 0.9 0.9 0.8

49. Taxes 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

50. Imports 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Legal, accounting, and bookkeeping

51. Total 1.3 1.3 1.3 1.3 1.3 1.4 1.5 1.6 1.7 1.8 1.8 1.8 1.8 1.8 1.7 1.8

52. Labor 0.8 0.9 0.9 1.0 1.1 1.1 1.1 1.1 1.1 1.1 1.0 1.1

53. Property 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.7 0.7 0.6 0.6 0.7

54. Taxes 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

55. Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

At-home food dollar

All industries

56. Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

57. Labor 46.8 50.5 50.3 51.3 51.3 51.3 49.6 49.5 49.0 49.1 46.6 46.2

58. Property 38.3 36.0 37.2 35.6 35.9 34.8 36.6 35.5 35.7 34.7 36.2 36.2

59. Taxes 8.7 7.3 6.1 6.0 6.0 7.2 6.9 7.4 6.7 7.5 7.9 7.8

60. Imports 5.6 5.5 6.2 6.2 6.2 6.2 6.4 7.1 6.7 6.6 7.0 7.6 8.6 8.8 9.3 9.8

Farm and agribusiness

61. Total 19.8 19.0 19.5 18.7 18.9 18.5 18.1 17.7 17.4 17.4 17.6 17.6 17.0 17.2 18.5 18.3

62. Labor 5.4 5.3 5.6 5.5 5.6 5.7 5.0 4.6 4.6 4.8 4.4 4.3

63. Property 10.2 11.3 11.7 11.6 11.2 10.1 11.3 11.2 11.3 10.5 11.5 11.3

64. Taxes 1.4 0.0 -1.1 -1.2 -1.0 0.1 -0.3 0.2 -0.7 0.0 0.5 0.5

65. Imports 1.8 1.6 2.0 1.8 1.9 1.9 1.9 1.8 1.6 1.5 1.6 1.6 1.8 1.9 2.1 2.1

Food processing

66. Total 30.7 31.8 31.3 32.1 32.5 32.6 32.5 31.9 32.1 32.1 31.7 31.9 31.5 31.3 30.5 30.1

67. Labor 16.2 19.3 18.6 19.1 18.8 19.0 18.5 19.6 19.4 19.5 17.9 17.7

68. Property 12.6 10.1 10.8 9.8 10.4 10.1 10.2 9.1 8.8 8.6 9.3 9.1

69. Taxes 2.1 1.5 1.4 1.4 1.4 1.4 1.5 1.5 1.5 1.5 1.5 1.4

70. Imports 1.5 1.6 1.6 1.7 1.6 1.7 1.7 1.7 1.6 1.5 1.6 1.7 1.7 1.7 1.9 1.8

—continued
22

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

Economic Research Service/USDA

Table 3

Cost components of the U.S. nominal food dollar, 1993 to 2008—Continued

Primary 

factor cost

1990s 2000s

93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08

At-home food dollar

Packaging

71. Total 5.6 5.7 6.1 5.9 5.5 5.7 5.7 5.7 5.7 5.8 5.5 5.3 5.3 5.1 5.0 4.9

72. Labor 2.7 2.8 2.8 2.7 2.9 2.9 2.8 2.4 2.4 2.2 2.2 2.2

73. Property 1.5 1.6 1.6 1.5 1.4 1.5 1.3 1.4 1.4 1.3 1.2 1.2

74. Taxes 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2

75. Imports 0.9 1.0 1.2 1.1 1.0 1.1 1.2 1.3 1.2 1.2 1.2 1.3 1.3 1.4 1.3 1.4

Transportation

76. Total 5.8 5.9 5.8 5.7 5.6 5.8 5.7 5.5 5.5 5.5 5.3 5.5 5.4 5.6 5.1 5.1

77. Labor 3.2 3.4 3.4 3.3 3.4 3.3 3.1 3.2 3.1 3.1 2.8 2.8

78. Property 1.8 1.8 1.7 1.6 1.6 1.7 1.7 1.8 1.8 1.9 1.8 1.8

79. Taxes 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2

80.Imports 0.2 0.2 0.2 0.3 0.4 0.3 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4

Retail trade

81. Total 24.1 24.3 24.2 24.2 24.2 24.0 24.1 23.9 23.9 24.0 24.7 24.3 24.4 24.8 24.3 24.2

82. Labor 13.8 13.3 13.4 13.7 13.7 13.6 13.7 13.3 13.1 13.2 12.9 12.8

83. Property 6.3 5.8 5.7 5.2 5.3 5.6 6.0 6.0 6.1 6.3 6.2 6.2

84. Taxes 3.7 4.5 4.5 4.5 4.4 4.4 4.5 4.5 4.6 4.8 4.7 4.6

85. Imports 0.3 0.3 0.4 0.4 0.4 0.5 0.5 0.6 0.5 0.4 0.5 0.5 0.5 0.5 0.6 0.6

Foodservice

86. Total 0.7 0.7 0.8 0.8 0.8 0.8 0.8 0.9 0.9 1.0 1.0 1.0 0.9 0.9 0.9 0.9

87. Labor 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.5

88. Property 0.3 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

89. Taxes 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

90. Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Energy

91. Total 5.7 5.1 4.8 5.0 4.7 4.3 4.6 5.5 5.7 5.7 5.9 6.2 7.4 6.9 7.5 8.2

92. Labor 1.2 1.2 1.3 1.4 1.5 1.4 1.3 1.2 1.3 1.2 1.3 1.4

93. Property 2.1 2.1 2.2 2.4 2.5 2.3 2.4 2.4 2.8 2.5 2.7 3.1

94. Taxes 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6

95. Imports 0.8 0.7 0.7 0.8 0.9 0.5 0.7 1.2 1.3 1.5 1.7 2.1 2.7 2.8 3.0 3.2

Finance and Insurance

96. Total 3.9 3.8 3.6 3.7 3.8 4.0 4.3 4.6 4.6 4.6 4.3 4.4 4.3 4.3 4.5 4.8

97. Labor 1.7 2.2 2.4 2.5 2.5 2.4 2.3 2.4 2.3 2.3 2.4 2.5

98. Property 1.8 1.7 1.7 1.8 1.9 1.9 1.8 1.8 1.8 1.8 1.8 2.0

99. Taxes 0.2 0.1 0.2 0.2 0.2 0.2 0.1 0.2 0.2 0.1 0.2 0.2

100. Imports 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Advertising

101. Total 2.5 2.4 2.5 2.6 2.7 2.7 2.7 2.7 2.4 2.3 2.3 2.3 2.2 2.2 2.1 1.9

102. Labor 1.5 1.6 1.5 1.6 1.4 1.3 1.3 1.2 1.2 1.2 1.2 1.0

103. Property 1.1 1.0 1.0 0.9 0.8 0.9 0.9 0.9 0.9 0.9 0.8 0.8

104. Taxes 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

105. Imports 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

—continued
23

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

Economic Research Service/USDA

Table 3

Cost components of the U.S. nominal food dollar, 1993 to 2008—Continued

Primary 

factor cost

1990s 2000s

93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08

At-home food dollar

Legal, accounting, and bookkeeping

106. Total 1.4 1.3 1.4 1.4 1.4 1.5 1.5 1.6 1.7 1.7 1.8 1.7 1.7 1.7 1.7 1.8

107. Labor 0.8 0.9 0.9 1.0 1.1 1.1 1.1 1.0 1.0 1.0 1.0 1.0

108. Property 0.6 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6

109. Taxes 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

110. Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Away-from-home food dollar

All industries

111. Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

112. Labor 54.6 58.6 58.7 59.3 59.8 59.6 58.8 58.5 58.2 58.0 57.1 56.9

113. Property 32.3 29.5 29.4 28.4 28.4 28.6 29.2 29.0 28.9 28.8 29.5 29.5

114. Taxes 9.6 7.9 7.8 7.8 7.7 8.0 8.0 8.1 8.1 8.3 8.2 8.2

115. Imports 3.7 3.7 4.1 4.2 3.6 4.0 4.1 4.5 4.1 3.8 4.0 4.3 4.8 4.9 5.2 5.4

Farm and agribusiness

116. Total 8.0 7.5 7.5 7.3 7.2 6.3 5.4 4.8 4.2 3.6 3.9 3.7 3.6 3.1 3.6 3.4

117. Labor 2.0 1.8 1.6 1.4 1.3 1.2 1.1 1.0 1.0 0.9 0.9 0.8

118. Property 3.8 3.7 3.3 2.9 2.5 2.0 2.3 2.2 2.3 1.8 2.1 2.0

119. Taxes 0.6 0.1 -0.2 -0.2 -0.1 0.1 0.0 0.1 -0.1 0.1 0.1 0.1

120. Imports 0.9 0.8 0.9 0.8 0.9 0.8 0.7 0.6 0.5 0.4 0.4 0.4 0.5 0.4 0.5 0.5

Food processing

121. Total 10.3 10.3 10.5 10.8 10.8 10.1 8.4 7.1 6.3 5.7 5.7 5.2 5.3 4.4 4.8 4.6

122. Labor 5.5 6.0 4.8 4.3 3.8 3.4 3.4 3.2 3.3 2.7 2.8 2.7

123. Property 3.9 3.0 2.6 2.1 1.9 1.7 1.8 1.4 1.4 1.2 1.4 1.4

124. Taxes 0.7 0.5 0.4 0.3 0.3 0.3 0.3 0.2 0.3 0.2 0.2 0.2

125. Imports 0.7 0.7 0.7 0.7 0.6 0.6 0.5 0.5 0.4 0.3 0.3 0.3 0.4 0.3 0.4 0.4

Packaging

126. Total 3.5 3.6 3.9 3.7 3.5 3.5 3.4 3.4 3.2 3.2 3.1 3.0 3.0 2.9 2.9 2.9

127. Labor 1.7 1.7 1.6 1.6 1.6 1.6 1.5 1.3 1.3 1.2 1.3 1.2

128. Property 1.0 1.0 1.0 0.9 0.8 0.8 0.8 0.8 0.8 0.7 0.7 0.7

129. Taxes 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

130. Imports 0.6 0.6 0.8 0.7 0.6 0.7 0.7 0.8 0.7 0.7 0.7 0.8 0.8 0.8 0.8 0.8

Transportation

131. Total 2.8 2.8 2.7 2.7 2.6 2.5 2.3 2.1 1.9 1.8 1.8 1.8 1.7 1.7 1.6 1.5

132. Labor 1.5 1.5 1.3 1.2 1.2 1.1 1.1 1.0 1.0 0.9 0.8 0.8

133. Property 0.8 0.8 0.7 0.6 0.6 0.5 0.6 0.6 0.6 0.6 0.5 0.5

134. Taxes 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

135. Imports 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Retail trade

136. Total 0.7 0.8 0.8 0.8 0.7 0.6 0.7 0.6 0.4 0.5 0.5 0.5 0.6 0.6 0.6 0.5

137. Labor 0.4 0.4 0.4 0.3 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3

138. Property 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.1

139. Taxes 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

140. Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

—continued
24

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

Economic Research Service/USDA

ditures in 1997, and at their lowest in 2006 at just under 32 cents. Property 

incomes amounted to roughly one-third of the total food dollar in 2007 and 

2008. Farm and agribusiness property income (including land) were highest 

among food supply chain industry groups from 1997 to 2001, reaching 8.3 

cents in 1999 (table 3, line 8). From 2002 onward, the foodservice industry 

had the highest returns to capital, surpassing 9 cents of every dollar spent 

on U.S.-produced food by U.S. households in 2006 and 2008 (table 3, line 

33). Property income of food processors fell off substantially over the study 

period (table 3, line 13). On a percentage basis, property income for packaging and advertising also dropped substantially, while returns to capital for 

the energy and the legal/accounting/bookkeeping industries trended higher 

throughout the study period as a share of total food dollar expenditures.

Table 3

Cost components of the U.S. nominal food dollar, 1993 to 2008—Continued

Primary 

factor cost

1990s 2000s

93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08

Away-from-home food dollar

Foodservice

141. Total 63.8 64.5 64.3 64.3 64.6 66.1 68.5 69.9 71.8 73.1 73.0 73.7 73.1 75.0 73.9 74.1

142. Labor 39.1 42.1 43.5 44.5 45.9 46.4 46.0 46.3 45.9 46.7 45.7 45.8

143. Property 17.9 16.4 17.0 17.1 17.7 18.7 18.9 19.0 18.7 19.6 19.6 19.7

144. Taxes 7.1 6.4 6.6 6.7 6.7 6.8 6.8 6.9 7.0 7.2 6.9 6.9

145. Imports 0.9 1.0 1.1 1.2 0.6 1.3 1.4 1.6 1.5 1.3 1.3 1.4 1.5 1.6 1.7 1.8

Energy

146. Total 4.2 3.8 3.7 3.7 3.5 3.3 3.4 3.8 3.9 3.8 3.9 4.0 4.6 4.4 4.7 5.0

147. Labor 0.9 1.0 1.0 1.0 1.0 1.0 0.9 0.9 0.9 0.8 0.9 0.9

148. Property 1.6 1.7 1.7 1.8 1.8 1.6 1.7 1.7 1.9 1.7 1.8 2.0

149. Taxes 0.4 0.4 0.4 0.4 0.3 0.4 0.4 0.3 0.4 0.4 0.4 0.4

150. Imports 0.5 0.4 0.4 0.5 0.6 0.3 0.4 0.7 0.7 0.8 1.0 1.1 1.5 1.5 1.6 1.7

Finance and insurance

151. Total 3.5 3.4 3.3 3.4 3.5 3.7 3.9 4.0 3.9 3.8 3.6 3.7 3.6 3.5 3.7 3.9

152. Labor 1.6 2.0 2.2 2.3 2.2 2.1 2.0 2.1 2.0 2.0 2.1 2.1

153. Property 1.7 1.5 1.5 1.5 1.6 1.5 1.4 1.5 1.5 1.4 1.5 1.5

154. Taxes 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

155. Imports 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Advertising

156. Total 2.2 2.2 2.2 2.3 2.4 2.6 2.6 2.8 2.7 2.6 2.6 2.6 2.5 2.5 2.5 2.2

157. Labor 1.3 1.5 1.5 1.6 1.6 1.5 1.5 1.4 1.4 1.4 1.3 1.2

158. Property 1.0 0.9 1.0 0.9 0.9 1.0 1.0 1.0 1.0 1.0 1.0 0.9

159. Taxes 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

160. Imports 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Legal, accounting, and bookkeeping

161. Total 1.2 1.1 1.2 1.2 1.2 1.3 1.5 1.6 1.8 1.9 2.0 1.9 1.9 1.9 1.8 2.0

162. Labor 0.7 0.8 0.9 1.0 1.1 1.2 1.2 1.1 1.1 1.1 1.1 1.2

163. Property 0.5 0.5 0.5 0.5 0.6 0.6 0.7 0.7 0.7 0.7 0.7 0.7

164. Taxes 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

165. Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Source: USDA, Economic Research Service.
25

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

Economic Research Service/USDA

Taxes (less subsidies) and fees on industry output include Federal excise taxes 

and custom duties, State and local sales and property taxes, and some nontax 

fees and assessments. From 1997 to 2008, these production costs ranged 

between a low of 6.7 cents in 2000 to a high of 9.0 cents in 1997 (table 3, row 

4). The highest property income taxes fell on the food retailing and foodservice industries (table 3, rows 29 and 34). Overall output taxes on farming and 

agribusiness were negative in some years, owing to the Federal production 

subsidies on numerous farm commodities (table 3, line 9).

Imports of food and nonfood ingredients have been the fastest growing of 

the primary factor returns. Because detailed country-of-origin input-output 

tables are not available for these imports, only the total primary factor value 

contributions are reported for each supply chain industry group, based on 

the commodity values of imports entering the country.12 Less than 5 cents 

of the value of U.S.-produced food sold to U.S. households in 1993 was 

for imported commodities. By 2008, this value had increased 65 percent, 

reaching 7.8 cents of each dollar spent on U.S.-produced foods (table 3, line 

5). Between 1993 and 2001, farm and agribusiness imports were the leading 

contributors to the import value of U.S.-produced food (table 3, line 10). In 

2002, the energy industry overtook all other industries in total import value 

contributions to the food dollar, and by 2008 imported energy of 2.5 cents on 

the dollar (table 3, line 40) was almost twice that of the industry group with 

the next highest import value, farm and agribusiness at 1.4 cents (table 3, line 

10). The overall increase in import share of the food dollar between 2001 and 

2008 coincides with declines in the domestic wage share over this period.

The foodservice industry led total food dollar value contributions (in 

nominal dollars) of the supply chain industry groups (table 3, line 31), 

followed by the food processing industry (table 3, line 11). However, value 

added to the food dollar by these two industry groups has been going in 

different directions. A comparison of the contribution of the two groups 

between the 1990s and the fi rst decade of the 2000s shows that foodservices added about 8.3 cents in value to each dollar spent on food, an 

increase of over 30 percent, whereas food processors did not increase their 

value contribution. The largest percentage increase in value contribution 

among the industries was 74 percent from the energy industry group (table 

3, line 36), followed by an increase of 38 percent from the legal/accounting/

bookkeeping industry group (table 3, line 51).

For at-home and food-away expenditures, the range of total returns to 

primary factors for salaries and output taxes over the study period was lower 

for the at-home food dollar than the food-away food dollar, whereas the range 

of total payments for imports and returns to capital was lower for total foodaway food expenditures. For the food-away expenditures, the foodservice 

industry group dominated supply chain value added, accounting for about 

three-quarters of total value, and this industry group generated a higher than 

average share of its value added from salaries and retail sales taxes (table 

3, lines 141-145). For at-home expenditures, the food processing industry 

accounted for close to a third of total food value over the study period (table 

3, line 66), and the food retailing industry group accounted for about a 

quarter (table 3, line 81). Among supply chain industry groups, the changes in 

value contributions of the energy industry were the most pronounced, rising 

from 4.3 cents per dollar of at-home food expenditures in 1998 to 8.2 cents in 

12For example, the value of imported 

fertilizer is treated as import value 

added of the farm and agribusiness 

industry. The foreign natural gas industry contribution to the cost of imported 

nitrogen fertilizers is not reallocated to 

the energy industry.
26

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

Economic Research Service/USDA

2008. About 90 percent of this increase was from higher energy imports and 

higher returns to capital.

Table 4 reports the value components of the U.S. real (infl ation-adjusted) 

expenditures of total, at-home, and food-away food dollars from 1993 to 

2008. The table shows results for total domestic primary factor returns, total 

import primary factor returns, and the sum of those two factor returns, for all 

industries combined and each of the 10 supply chain industry groups, for a 

total of 99 categories. Table lines are numbered for reference. 

A comparison of the nominal total industry import value added (table 3, 

line 5) and the corresponding real (infl ation-adjusted) series (table 4, line 

3) shows a close correspondence over the period 1993 to 2000—both dollar 

series climbed from 4.7 cents to 6.0 cents. Between 2000 and 2006, however, 

the nominal series became volatile, dropping to 5.5 cents by 2002 and rising 

to 7 cents by 2006, whereas the real import value-added series remained 

about the same over the period. By 2008, the nominal series had reached 

7.8 cents and the real series declined to 5.6 cents. Because the real import 

value-added industry series in table 4 is measured in constant year 2000 

prices for domestic and imported commodities, the volatility of post-2000 

nominal import values (table 3) in relation to the real import values (table 4) 

over this period refl ects volatility in the prices of imports relative to domestic 

commodities used by the food system. Notably, nominal import value added 

reached 9.7 cents of the at-home food dollar (table 3, line 60) in 2008, 

compared with a real (infl ation-adjusted) value of 7.1 cents (table 4, line 36). 

Imported energy, primarily crude oil and petroleum products, is behind this 

surge in import value. Energy is the only import commodity group to have 

an increase in real value added over the period 2000-08, even as the price of 

imported energy increased rapidly over this interval (table 4, line 24). 

Between 1996 and 2005, the real (infl ation-adjusted) value added by food 

services gradually increased from 27 to 32 cents of each dollar spent on U.S.-

produced food (table 4, line 19). Over this same interval, the price of food 

services remained roughly equal to their year 2000 level. In 2006, the price of 

food services declined, and the volume of these services purchased per dollar 

spent on food spiked 14 percent. In 2007-08, the average price of food services 

rose but remained below their year 2000 level, and the volume of purchases 

remained high, keeping nominal foodservice value added near its 2006 level.

The volume of retail trade services purchased in each real food dollar generally increased between 1993 and 2007, from 12.9 to 15.4 cents, but dropped 

off in 2008 to 13.3 cents of the total food dollar (table 4, line 16). Trade 

services per nominal food dollar remained in the 14- to 15-cent range over 

this interval, implying that the price of retail food services per unit of volume 

declined over the interval before spiking upward in 2008.

Figure 6 provides some context for these fi ndings. Using annual data on the 

total number of supermarkets, full-service restaurants, and limited-service 

restaurants per capita in the United States for the years 2000-08, the fi gure 

charts these data as indexes representing the percentage of their respective 

year 2000 per capita establishment-count totals. For example, the chart indicates that there were roughly 10 percent fewer supermarkets per capita in 

the United States in 2008 than in 2000. Fewer food retail stores per capita 
27

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

Economic Research Service/USDA

Table 4

Cost components of the U.S. real food dollar, 1993 to 2008

Primary 

factor cost

1990s 2000s

93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08

Total food dollar

All industries

1. Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

2. Val. added 95.3 95.4 95.1 94.9 94.6 94.4 94.2 94.0 94.1 94.1 94.0 94.0 93.8 94.0 93.6 94.4

3. Imports 4.7 4.6 4.9 5.1 5.4 5.6 5.8 6.0 5.9 5.9 6.0 6.0 6.2 6.0 6.4 5.6

Farm and agribusiness

4. Total 13.2 12.0 12.7 13.1 12.8 12.7 12.7 12.4 12.2 11.3 11.6 11.2 10.8 10.0 10.7 10.8

5. Val. added 12.0 10.9 11.4 11.9 11.5 11.3 11.4 11.1 11.0 10.1 10.4 10.1 9.6 8.8 9.4 9.6

6. Imports 1.2 1.0 1.2 1.2 1.3 1.4 1.4 1.3 1.2 1.2 1.2 1.1 1.3 1.2 1.3 1.1

Food processing

7. Total 23.2 24.6 23.9 23.9 24.1 23.5 22.5 21.7 21.1 20.9 20.4 19.7 20.3 18.6 19.2 19.2

8. Val. added 22.3 23.6 23.0 22.9 23.0 22.3 21.3 20.6 20.0 19.9 19.4 18.6 19.2 17.7 18.1 18.3

9. Imports 0.9 0.9 1.0 1.0 1.1 1.2 1.2 1.2 1.1 1.0 1.1 1.1 1.1 1.0 1.1 0.9

Packaging

10. Total 4.9 5.0 5.1 5.0 4.8 4.9 4.8 4.7 4.7 4.8 4.6 4.4 4.4 4.1 4.0 3.8

11. Val. added 4.1 4.2 4.2 4.1 3.9 3.9 3.8 3.7 3.7 3.7 3.6 3.3 3.3 3.0 3.0 2.8

12. Imports 0.8 0.8 0.9 0.9 0.9 1.0 1.0 1.0 1.0 1.1 1.1 1.1 1.1 1.1 1.0 1.0

Transportation

13. Total 4.9 5.0 4.8 4.8 4.7 4.7 4.4 4.1 4.0 4.5 4.0 4.1 4.2 4.2 4.0 3.9

14. Val. added 4.7 4.8 4.6 4.6 4.5 4.4 4.1 3.8 3.8 4.2 3.7 3.8 3.9 4.0 3.7 3.7

15. Imports 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.2 0.3 0.3 0.3 0.2 0.3 0.3 0.2

Retail trade

16. Total 12.9 13.3 13.3 13.9 14.1 14.3 14.5 14.2 14.6 15.1 15.7 15.1 15.4 14.4 15.4 13.3

17. Val. added 12.7 13.1 13.1 13.7 13.8 14.1 14.2 13.9 14.3 14.8 15.4 14.8 15.1 14.2 15.1 13.1

18. Imports 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.3 0.2

Foodservice

19. Total 28.0 28.0 28.1 27.1 27.5 27.7 28.3 29.4 29.9 30.0 30.5 32.4 31.6 36.0 33.5 35.7

20. Val. added 27.6 27.6 27.6 26.7 27.0 27.1 27.7 28.8 29.3 29.5 30.0 31.9 31.1 35.4 32.9 35.2

21. Imports 0.4 0.4 0.4 0.5 0.5 0.6 0.6 0.6 0.6 0.5 0.5 0.6 0.5 0.6 0.6 0.5

Energy

22. Total 5.1 4.7 4.6 4.6 4.4 4.3 4.6 4.8 4.9 5.2 4.9 4.8 5.1 4.6 4.9 5.0

23. Val. added 4.3 3.9 3.8 3.8 3.5 3.6 3.8 3.8 3.8 3.8 3.6 3.4 3.7 3.1 3.3 3.6

24. Imports 0.8 0.8 0.8 0.8 0.8 0.7 0.8 1.0 1.1 1.4 1.3 1.4 1.5 1.5 1.5 1.4

Finance and Insurance

25. Total 3.6 3.6 3.4 3.4 3.5 3.7 3.9 4.3 4.4 4.3 4.2 4.4 4.4 4.3 4.6 4.6

26. Val. added 3.5 3.5 3.3 3.3 3.4 3.6 3.8 4.2 4.2 4.1 4.1 4.3 4.2 4.1 4.4 4.5

27. Imports 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2

Advertising

28. Total 2.5 2.5 2.6 2.6 2.7 2.7 2.7 2.7 2.5 2.3 2.3 2.3 2.3 2.3 2.3 2.1

29. Val. added 2.4 2.4 2.5 2.6 2.6 2.6 2.6 2.6 2.4 2.3 2.2 2.3 2.2 2.2 2.2 2.0

30. Imports 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Legal, accounting, and bookkeeping

31. Total 1.6 1.5 1.5 1.5 1.5 1.5 1.5 1.6 1.7 1.7 1.7 1.6 1.6 1.6 1.5 1.6

32. Val. added 1.5 1.5 1.5 1.5 1.4 1.5 1.5 1.6 1.6 1.7 1.7 1.6 1.6 1.5 1.5 1.6

33. Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

—continued
28

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

Economic Research Service/USDA

Table 4

Cost components of the U.S. real food dollar, 1993 to 2008—Continued

Primary 

factor cost

1990s 2000s

93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08

At-home food dollar

All industries

34. Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

35. Val. added 94.2 94.4 94.0 93.8 93.5 93.3 93.1 92.9 93.1 93.1 93.0 92.9 92.5 92.6 92.3 93.1

36. Imports 5.8 5.6 6.0 6.2 6.5 6.7 6.9 7.1 6.9 6.9 7.0 7.1 7.5 7.4 7.7 6.9

Farm and agribusiness

37. Total 18.5 16.7 17.8 18.0 17.7 17.6 17.9 17.7 17.5 16.1 16.6 16.5 15.8 15.8 15.7 16.9

38. Val. added 16.8 15.2 16.1 16.3 15.9 15.7 16.0 15.9 15.8 14.5 14.9 14.9 14.0 14.0 13.8 15.2

39. Imports 1.7 1.4 1.7 1.7 1.7 1.9 1.9 1.8 1.7 1.6 1.6 1.6 1.8 1.8 1.9 1.7

Food processing

40. Total 33.2 35.2 34.2 33.6 33.9 33.0 32.2 31.9 31.2 31.0 30.6 30.5 31.1 31.0 30.7 32.1

41. Val. added 31.9 33.9 32.8 32.2 32.4 31.4 30.5 30.2 29.6 29.5 29.0 28.9 29.4 29.4 29.0 30.7

42. Imports 1.3 1.3 1.3 1.4 1.5 1.7 1.7 1.7 1.6 1.5 1.6 1.7 1.7 1.6 1.7 1.4

Packaging

43. Total 6.5 6.7 6.7 6.5 6.2 6.1 5.9 5.7 5.6 5.5 5.3 5.1 5.1 4.8 4.7 4.6

44. Val. added 5.4 5.6 5.5 5.3 5.1 4.9 4.7 4.5 4.3 4.3 4.1 3.8 3.8 3.5 3.5 3.4

45. Imports 1.0 1.1 1.2 1.2 1.2 1.2 1.2 1.3 1.2 1.2 1.2 1.2 1.3 1.2 1.2 1.2

Transportation

46. Total 6.4 6.5 6.3 6.2 6.1 6.1 5.8 5.5 5.5 6.2 5.5 5.8 5.8 6.2 5.7 5.9

47. Val. added 6.2 6.2 6.1 5.9 5.8 5.7 5.4 5.1 5.1 5.8 5.1 5.4 5.5 5.9 5.3 5.5

48. Imports 0.2 0.2 0.3 0.3 0.4 0.4 0.4 0.4 0.3 0.4 0.4 0.4 0.3 0.4 0.5 0.3

Retail trade

49. Total 20.1 20.4 20.6 21.1 21.6 22.7 23.5 23.9 25.3 26.5 27.8 27.8 27.7 28.1 28.7 25.6

50. Val. added 19.8 20.1 20.2 20.7 21.1 22.2 22.9 23.4 24.8 26.0 27.2 27.3 27.2 27.6 28.1 25.2

51. Imports 0.3 0.3 0.4 0.4 0.4 0.5 0.5 0.6 0.5 0.5 0.6 0.5 0.5 0.5 0.6 0.4

Foodservice

52. Total 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.8 0.8 0.8 0.8

53. Val. added 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.8 0.8 0.8 0.8 0.8

54. Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Energy

55. Total 6.6 6.0 5.9 5.8 5.6 5.3 5.5 5.5 5.4 5.4 5.2 5.1 5.4 4.9 5.2 5.5

56. Val. added 5.5 5.0 4.8 4.8 4.5 4.4 4.4 4.3 4.1 3.9 3.7 3.6 3.8 3.2 3.4 3.8

57. Imports 1.1 1.1 1.1 1.1 1.1 0.9 1.1 1.2 1.3 1.5 1.5 1.6 1.7 1.7 1.8 1.7

Finance and insurance

58. Total 3.8 3.7 3.6 3.7 3.8 4.1 4.2 4.6 4.6 4.4 4.2 4.4 4.5 4.5 4.7 5.0

59. Val. added 3.8 3.7 3.6 3.7 3.8 4.0 4.2 4.5 4.5 4.3 4.2 4.4 4.4 4.4 4.7 4.9

60. Imports 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Advertising

61. Total 2.2 2.2 2.3 2.4 2.4 2.5 2.5 2.7 2.5 2.4 2.4 2.4 2.4 2.4 2.4 2.2

62. Val. added 2.2 2.2 2.3 2.3 2.4 2.5 2.5 2.6 2.4 2.4 2.3 2.4 2.3 2.3 2.3 2.1

63. Imports 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Legal, accounting, and bookkeeping

64. Total 1.8 1.7 1.7 1.7 1.7 1.7 1.6 1.6 1.6 1.5 1.5 1.5 1.5 1.4 1.4 1.4

65. Val. added 1.8 1.7 1.7 1.7 1.7 1.6 1.6 1.6 1.6 1.5 1.5 1.4 1.4 1.4 1.3 1.4

66. Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

—continued
29

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

Economic Research Service/USDA

Table 4

Cost components of the U.S. real food dollar, 1993 to 2008—Continued

Primary 

factor cost

1990s 2000s

93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08

Away-from-home food dollar

All industries

67. Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

68. Val. added 96.6 96.7 96.4 96.3 96.1 95.8 95.7 95.5 95.7 95.7 95.7 95.7 95.6 95.7 95.4 96.1

69. Imports 3.4 3.3 3.6 3.7 3.9 4.2 4.3 4.5 4.3 4.3 4.3 4.3 4.4 4.3 4.6 3.9

Farm and Aagribusiness

70. Total 4.9 4.3 4.4 4.7 4.7 4.8 4.8 4.8 5.0 4.7 5.2 4.8 4.5 3.7 4.9 4.0

71. Val. added 4.4 3.8 3.9 4.2 4.1 4.2 4.2 4.2 4.4 4.1 4.5 4.3 3.9 3.2 4.2 3.5

72. Imports 0.5 0.4 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.7 0.5

Food processing

73. Total 6.0 5.9 6.0 6.1 6.4 7.4 7.3 7.1 7.4 7.8 7.6 6.9 7.1 5.7 5.8 5.0

74. Val. added 5.6 5.6 5.6 5.7 6.0 7.0 6.8 6.7 7.0 7.4 7.1 6.5 6.7 5.3 5.4 4.7

75. Imports 0.3 0.3 0.3 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.4 0.5 0.4 0.4 0.3

Packaging

76. Total 3.4 3.5 3.6 3.5 3.4 3.5 3.5 3.4 3.3 3.3 3.2 3.1 3.1 2.9 2.8 2.6

77. Val. added 2.9 2.9 2.9 2.8 2.8 2.8 2.7 2.6 2.6 2.6 2.4 2.3 2.3 2.1 2.1 1.9

78. Imports 0.6 0.6 0.6 0.6 0.7 0.7 0.7 0.8 0.7 0.8 0.7 0.8 0.8 0.8 0.7 0.7

Transportation

79. Total 2.6 2.6 2.5 2.5 2.4 2.5 2.3 2.1 2.0 2.2 2.1 2.1 2.1 2.1 1.9 1.8

80. Val. added 2.5 2.5 2.4 2.3 2.3 2.3 2.1 1.9 1.9 2.0 1.9 1.9 1.9 1.9 1.8 1.7

81. Imports 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.1 0.2 0.2 0.2 0.1 0.1 0.2 0.1

Retail trade

82. Total 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.4 0.5 0.5 0.4 0.5 0.4 0.5 0.4

83. Val. added 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.4 0.5 0.5 0.4 0.5 0.4 0.5 0.4

84. Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Foodservice

85. Total 70.5 71.6 71.5 71.0 71.0 69.5 69.7 69.9 69.9 69.8 70.1 71.2 71.1 74.0 72.4 74.6

86. Val. added 69.5 70.5 70.3 69.7 69.6 68.0 68.2 68.3 68.5 68.5 68.8 69.9 69.8 72.7 71.1 73.4

87. Imports 1.1 1.1 1.2 1.3 1.4 1.5 1.5 1.6 1.4 1.3 1.3 1.3 1.3 1.3 1.4 1.2

Energy

88. Total 4.4 4.1 4.0 4.0 3.8 3.8 3.8 3.8 3.8 3.9 3.7 3.7 3.8 3.5 3.7 3.8

89. Val. added 3.8 3.5 3.4 3.4 3.2 3.2 3.2 3.1 3.0 3.0 2.8 2.7 2.9 2.5 2.7 2.9

90. Imports 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.8 0.9 0.9 0.9 1.0 1.0 1.1 0.9

Finance and insurance

91. Total 3.3 3.3 3.2 3.3 3.4 3.6 3.7 4.0 4.0 3.8 3.7 3.9 3.9 3.9 4.1 4.2

92. Val. added 3.3 3.2 3.1 3.3 3.3 3.5 3.7 3.9 3.9 3.8 3.7 3.8 3.9 3.8 4.1 4.1

93. Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Advertising

94. Total 2.4 2.4 2.5 2.5 2.6 2.6 2.7 2.8 2.5 2.5 2.4 2.5 2.4 2.4 2.4 2.2

95. Val. added 2.4 2.3 2.4 2.5 2.5 2.6 2.6 2.7 2.5 2.4 2.4 2.4 2.4 2.4 2.3 2.2

96. Imports 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Legal, accounting, and bookkeeping

97. Total 1.8 1.7 1.7 1.7 1.7 1.7 1.6 1.6 1.6 1.5 1.5 1.5 1.5 1.4 1.4 1.4

98. Val. added 1.8 1.7 1.7 1.7 1.7 1.6 1.6 1.6 1.6 1.5 1.5 1.5 1.5 1.4 1.3 1.4

99. Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Source: USDA, Economic Research Service.
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would indicate that food retailing services per establishment had increased, 

suggesting that declines in the average price of food retailing services over 

the study period might have resulted from increasing economies of scale in 

the provision of the services.

A comparison of table 3, line 141 and table 4, line 85 shows that the nominal 

foodservice value added per food-away dollar ran slightly higher than the real 

(infl ation-adjusted) volume shares between 2000 and 2004, but beginning 

in 2005 the nominal foodservice share fell below real share value. Since the 

nominal foodservice share also gained about 4 cents of the overall food-away 

dollar between 2000 and 2004, these results indicate that the average cost 

of food services increased relative both to its year 2000 price and to overall 

food prices between 2000 and 2004. From 2005 to 2008, average foodservice 

prices fell below their year 2000 level, but the nominal foodservice share of 

the food-away dollar continued to increase due to growth in the volume of 

foodservices in the food-away dollar. Returning to fi gure 6, note that from 

2000 forward, the rate of increase in the number of full-service restaurants 

per capita outpaced the increase in limited-service restaurants. This suggests 

that U.S. food consumers were purchasing more services per meal over time, 

which could explain at least some of both the price and volume changes in 

foodservices over the period.

Figure 6

Number of establishments per capita, 2000-08

Index 2000=100

Source: USDA, ERS calculations based on the Quarterly Census of Employment and Wages, 

Bureau of Labor Statistics, U.S. Department of Labor, and Annual Population Estimates, 

Census Bureau, U.S. Department of Commerce. 

2000 01 02 03 04 05 06 07 08

80

85

90

95

100

105

110

115

120

Supermarkets

Full service restaurants

Limited service restaurants
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The Food Dollar: Looking Ahead

Historical observations of relationships among food dollar expenditures, the 

component values of those expenditures, and both producer and consumer 

food prices can inform our understanding of the implications of USDA food 

market forecasts for the food dollar. 

Several determinants of change in U.S. food markets between 1993 and 2008 

are especially notable. The increasing demand for food services by U.S. 

households, followed by an increased demand for higher priced services (e.g., 

full- versus limited-service restaurants), was instrumental in driving down 

the farm share of the food dollar over a portion of the study period. Even in 

periods where the relative price of farm commodities appeared to be gaining 

on retail food prices, increasing purchases of food services—essentially, 

paying others to prepare meals and clean up afterwards—drove the farm 

share and the farm and agribusiness value-added shares down. A weakening 

of the U.S. dollar relative to other international currencies drove up the prices 

of imported ingredients for the food system. Yet, while the real value of most 

imports remained a roughly constant share of the real food dollar over the 

study period (table 4), the real value of imported energy increased by over 50 

percent, and this—coupled with the sharp increase in energy prices starting 

in 2003—pushed the import share of the nominal food dollar up by more 

than 300 percent overall (1993 to 2008), to as high as 8.2 cents for the 2008 

at-home food dollar. Although the food retailing nominal value-added share 

was largely unchanged over the study period, an examination of the constant 

price value share of food retailing shows that food retailing services substantially increased over the interval, but these volume increases were offset by 

equally substantial price decreases for these services.

Energy value shares can be infl uenced by energy prices, but can also be 

affected by the types of food products households purchase, as well as by 

labor market conditions. Between 1997 and 2007, the U.S. food system 

increased its energy use, and both tight labor markets and consumer demand 

for more food processing services were found to loom large in these increases 

(Canning et al., 2010). Rapid consolidation of the food retailing industry and 

economies of scale appear to be behind the decline in price and increase in 

volume of food retailing services over the study period. Continuing consolidation in the food retailing industry may produce more scale economies, but 

these could be offset by increased incentives for price collusion.

A few observations stand out regarding the new estimation methodology 

described in this report: 

• A lower farm share measure is obtained in the new food dollar series than 

the measure under the old marketing bill, largely accounted for by the 

deduction of farm-to-farm transactions, as specifi ed in equation 2. 

• Comparing real (infl ation-adjusted) estimates of the farm share with 

nominal (current-value) estimates allows us to see to what extent changes 

in the farm share over time are attributable to changes in farm-level 

prices relative to other prices in the economy, and to what extent the farm 

share changes are attributable to changes in the quantity of services and 

materials provided by the food marketing system. 
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• Separately comparing changes in the farm share for food away from 

home and food at home allows us to see to what extent changes in the 

farm share over time are attributable to the increase in food consumed 

away from home. 

• Estimates of value added by individual sectors of the food supply chain 

provide a new, more comprehensive way of looking at where the consumer’s 

food dollar goes.

• Dividing the food dollar by sector, and then separately by factor, avoids 

the potentially confusing divisions of the marketing bill method, which 

combined the two.

The offi cial USDA annual outlook projections are based on clear and 

defensible assumptions about key market outcomes (U.S. Department of 

Agriculture, 2010). Presented as a point of departure for discussions of alternative farm and food industry outcomes, the current long-term report includes 

projections out to 2019 for U.S. farm-level food commodity prices, consumer 

food prices for both at-home and food-away expenditures, and total at-home 

and food-away food expenditures (fi gure 7). Farm commodity prices are 

projected to initially lose ground for a few years on retail food prices and 

then to keep pace through most of the next decade. Food-away expenditures 

are forecast to outpace at-home expenditures over this period. Both sets of 

projections point to a falling farm share measure. 

Figure 7

Long-term U.S. price and expenditure projections, 2008-19

Year-to-year percent change in price indexes

Source: USDA Agricultural Projections to 2019, Interagency Agricultural Projections Committee/USDA, 2010.

2008 10 12 14 16 18

-15

-10

-5

0

5

10

Farm price for food commodities

Consumer food prices, all food

2008 10 12 14 16 18

500

550

600

650

700

750

800

850

900

Food at home

Food away from home

Annual U.S. food expenditures - $ billion

Price projections Expenditure projections
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References

Canan, B., and R.W. Cotterill. 2006. “Strategic Pricing in a Differentiated 

Product Oligopoly Model: Fluid Milk in Boston,” Agricultural Economics

35:27-33.

Canning, P., A. Charles, S. Huang, K.R. Polenske, and A. Waters. 2010. 

Energy Use in the U.S. Food System. U.S. Department of Agriculture, 

Economic Research Service, Economic Research Report No. 94 (March). 

http://www.ers.usda.gov/Publications/err94/err94.pdf

Elitzak, H. 1999. Food Cost Review, 1950-97. U.S. Department of 

Agriculture, Economic Research Service, Agricultural Economic Report 

No. 780 (June):19-23. http://www.ers.usda.gov/Publications/AER780/

Elitzak, H. 2004. “Calculating the Food Marketing Bill,” Amber Waves, Vol. 

2, No. 1 (February): p. 43. U.S. Department of Agriculture, Economic 

Research Service. http://www.ers.usda.gov/AmberWaves/February04/

Gale, H.F. 1967. The Farm Food Marketing Bill and its Components. U.S. 

Department of Agriculture, Economic Research Service, Agricultural 

Economics Report No. 105 (January).

Gardner, B. 1975. “The Farm-Retail Price Spread in a Competitive Food 

Industry,” American Journal of Agricultural Economics 57(3):399-409.

Golan, Amos, George Judge, and Sherman Robinson. 1994. “Recovering 

Information From Incomplete or Partial Multisectoral Economic Data,” 

The Review of Economics and Statistics LXXVI(3):541-49.

Harp, H. 1987. Major Statistical Series of the U.S. Department of Agriculture, 

Vol. 4: Agricultural Marketing Costs and Charges. Agricultural 

Handbook No. 671.

Hirst, E. 1974. “Food-Related Energy Requirements,” Science 184(April 

12):134-38.

Kuchler, F., and O. Burt. 1990. “Revisions in the Farmland Value Series.” 

Special Article for Agricultural Resources: Agricultural Land Values and 

Markets Situation and Outlook Report, AR-18 (June), U.S. Department of 

Agriculture, Economic Research Service, pp. 32-35.

Leontief, W. 1986. Input-Output Economics. 2nd ed. New York: Oxford 

University Press.

McDougall, R.A. 1999. “Entropy Theory and RAS are Friends.” Paper 

presented at the 5th Conference of Global Economic Analysis, 

Copenhagen, Denmark.

Schluter, G., C. Lee, and M. LeBlanc. 1998. “The Weakening Relationships 

between Farm and Food Prices,” American Journal of Agricultural 

Economics 80(5):1134-38.
34

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

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U.S. Department of Agriculture, Offi ce of the Chief Economist. 2010. USDA 

Agricultural Projections to 2019, OCE-2010-1 (February). http://www.ers.

usda.gov/publications/oce101/

U.S. Department of Commerce, Bureau of Economic Analysis. (various 

years). Benchmark Input-Output Accounts, available at: www.bea.gov/

industry/index.htm#benchmark_io

U.S. Department of Commerce, Bureau of Economic Analysis. (various 

years). Annual Input-Output Accounts, available at: http://www.bea.gov/

industry/index.htm#annual

U.S. Department of Commerce, U.S. Census Bureau. Annual Population 

Estimates 2000 to 2008, www.census.gov/popest/states/NST-ann-est.html

U.S. Department of Labor, Bureau of Labor Statistics. (various years). Interindustry Relationships (Input/Output matrix), available at: www.bls.gov/

emp/ep_data_input_output_matrix.htm

U.S. Department of Labor, Bureau of Labor Statistics (BLS). (various years). 

Quarterly Census of Employment and Wages, www.bls.gov/cew/ 
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Appendix: Data Sources and Mathematical 

Derivation of the Food Dollar Series

A direct measure of the food dollar and the farm share, using input-output 

(IO) analysis, is stated concisely in equation 3 of this report, and measurement of value-added food dollar components is stated in equation 5. Although 

these measures are a conventional application of IO analysis, substantial 

preliminary data processing is needed to compile the source data into the 

required structure for implementing this analysis.

Data Sources 

The principal source data for this report are the annual U.S. input-output 

tables published by the U.S. Department of Labor’s Bureau of Labor Statistics 

(BLS). The BLS IO data series is released at 2-year intervals, with each 

release adding two annual data tables to the time series. The most recent 

release, in December 2009, provides annual tables for 1993 to 2008 (www.

bls.gov/emp/). Ancillary source data on industry value added by primary 

production factors are obtained from the annual industry Make and Use 

tables (before redefi nitions) published each year by the U.S. Department of 

Commerce’s Bureau of Economic Analysis (BEA). A mid-2010 release by 

BEA includes annual Make and Use tables for 1998 to 2008 (www.bea.gov/

industry/). The IO-based food dollar series in the present report are benchmarked to give more detailed estimates, using 1997 and 2002 benchmark IO 

Make and Use tables, also published by BEA. These benchmark accounts 

are released in 5-year intervals, with a 5-year lag between enumeration and 

release. For example, fi nal release of the 2002 benchmark account was in 

mid-2008. 

Additional source data are required to address a problem of aggregation bias 

in the available IO accounts. Although wholesale and retail trade margins are 

directly measured from primary data sources in the IO accounts, the composite 

wholesale and retail industries that facilitate these margin services are assumed 

to employ identical technologies for all users. As discussed in Hirst (1974), this 

convention produces an aggregation bias for the energy use by trade industry 

establishments serving the food system. The Economic Census (www.census.

gov/econ/) and Annual Survey of Retail Trade (www.census.gov/retail/) 

provide data for electricity and natural gas utility expenses per dollar of trade 

margin revenues for several 4-digit wholesale and retail North American 

Industry Classifi cation System (NAICS) industry groups (www.census.gov/

eos/www/naics/). These data are integrated into the IO accounts to address the 

identifi ed aggregation bias (discussed in the next section). 

To implement the IO estimation procedure for the new food dollar series, 

all fi ve data sources discussed above must be fully integrated, and a concordance matrix was developed to map the relationships among the industry/

commodity aggregations of the fi ve accounts. To facilitate a clean concordance across these NAICS-based data systems, some aggregation of the 

BLS industry/commodity groups was required. As a starting point for the 

data compilation procedures, the 202-order BLS IO tables are reduced to 

a 184-order aggregated annual IO table, the 400-plus order 1997 and 2002 

benchmark BEA tables are both reduced to the same 390-order aggregated 
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benchmark tables, and the 92-order annual BEA IO tables are reduced to a 

90-order aggregated IO table.

Disaggregation and Decomposition 

of IO Accounts 

The basic building blocks of input-output analysis are the “make,’’ “use,” 

“value added,” and “fi nal demand” tables, denoted by the matrices M and U

and the vectors v and f, respectively.13 For a given year, the make table itemizes the value for production of each commodity c  C by each industry i 

I. The use table itemizes annual outlays of each industry i  I for purchases of 

each commodity c  C. The value-added table itemizes annual outlays of each 

industry i  I for total payments to primary factor owners p  P. The fi nal 

demand table itemizes total fi nal market expenditures on each commodity c 

C. These four building block tables are published biannually by BLS.

Additionally, BLS publishes a supplemental fi nal demand table that provides 

a detailed breakout of fi nal demand expenditures. This data, along with the 

benchmark and annual make and use tables published by BEA, facilitates 

the computation of various share and binary vectors used extensively in this 

appendix to disaggregate and decompose the BLS IO accounts. The share 

vectors are denoted s_id, where id identifi es the share metric that is declared 

as needed. The binary vectors are denoted b_id, where id is declared as 

needed to identify a target commodity group. Binary vectors have unit values 

positioned in the appropriate sequence of a vector to identify target groups 

and have null values elsewhere. 

Procedures for compiling the BLS building block tables to carry out the analysis in this report involve several steps:

For each annual table from 1993 to 2008, convert the commodity by 

industry use table into a commodity-by-commodity interindustry transaction table (Z): 

(A1) 1 ({M } ) ZU iM C ,C C ,I I ,C C I ,C - =⋅ ⋅ ⋅

The ‘i’ is a unit vector that, when post- (pre-) multiplied into a matrix, 

produces a vector of the matrix row (column) sums. Equation A1 consolidates the production of each commodity c  C by the different industries 

producing the commodity into a single composite industry, such that there is 

a one-to-one mapping of industries to commodities. 

For each annual table from 1993 to 2008, convert the primary factor by 

the industry value-added table into an import-inclusive primary factor 

by commodity value-added table, and update the fi nal demand table 

accordingly. 

Let s_m denote the vector representing import shares of available product for 

each commodity c  C, as derived from the BLS supplemental fi nal demand 

table.14 Then the import-inclusive commodity value-added table is as follows: 

(A2) ( ) ( ) 1

C,P I,C v_m { } v M i M s_m f I I ,C C C C - é ù ¢ ê ú =⋅ ⋅⋅ ⋅ ¢

ë û

13Math notation is as follows: matrices are denoted with capitalized letters, 

vectors with lowercase letters, sets with 

capitalized and italicized letters, and 

set elements (and scalars) with lower 

case italicized letters. Dimensions are 

identifi ed by subscripts in row/column 

order. A prime () is the transpose 

operator, a  above a vector denotes 

its conversion to a diagonal matrix, and 

{}-1 indicates a matrix inversion.

14The BLS accounts treat commodity imports as components of fi nal 

demand, entering the accounts as negative values, whereas the approach used 

here is to treat imports as an industry 

outlay (analogous to a draw-down of 

international inventories), and so positive values are entered.
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This change requires that fi nal demand also be updated:

(A3) ( ) C C CC y i S_m f =- ⋅ ⋅

To verify that the procedures are properly carried out, the following relationships must hold among the three expressions:

(A4) Zi y Z i v i m ⋅+ = ⋅+ ⋅ ¢

Decouple the electricity and natural gas utility outlays of wholesale and 

retail service industries.

According to the 2002 Economic Census, food retailers spent an average 

of 3.9 cents on electric utilities for every dollar in retail margin revenues, 

whereas the average of this expenditure across all retail establishments was 

1.3 cents. Available data facilitates the disaggregation of retail services into 

11 distinct users’ groups, requiring a wide range of electric utility purchase 

coeffi cients. Similar scenarios exist for the wholesale industry and for natural 

gas utilities in both industries. To capture this wide variability, wholesale 

and retail industry utility outlays are decoupled and consolidated into a new 

‘trade utilities’ (tu) industry, as follows:

(A5) ( ) , new Z b_ge Z Z C ,tu C C ,wt C ,rt =⋅+

where b_ge is a binary vector identifying the natural gas and electric utility 

rows, tu denotes the position of the new trade utility industry column, and wt

and rt denote the positions of the wholesale and retail trade industry columns, 

respectively. No value-added outlays are attributed to the new trade utility 

industry:

(A6) 0 new

tu,P v_m =

The original wholesale and retail outlay columns are updated accordingly:

(A7) ( ) . , new Z i b_ge Z C ,wt c C C ,wt =- ⋅

(A8) ( ) . new Z i b_ge Z C ,rt c C C ,rt =- ⋅

Trade industry outlays for primary factor value added are unchanged.

Sales of the new trade utility commodity are measured based on the share 

of total outlays going to electricity and natural gas utilities for wholesale 

establishments selling each commodity c  C (s_weC, s_wgC), the share of 

total outlays going to electricity and natural gas utilities for retail establishments selling each commodity c  C (s_reC, s_rgC),15 and the trade margin 

matrices summarizing the wholesale and retail margins added to fob16 values 

reported in the interindustry transaction matrix (Z_wt, Z_rt): 

(A9) )( ) C ,C

new Z (S_we S_wg Z_wt s_re s_rg Z tu,C C C C ,C C C rt = + ⋅ ++ ⋅ ¢ ¢

No trade or transportation margin costs are attributed to the utility outlays, so 

if we denote tt the set of all trade and transportation margin industries (and 

15Utility outlays of the trade industries are based on the Census business 

expense data by 4-digit NAICS. These 

data are normalized to each year’s 

BLS estimates of wholesale and retail 

industry utility outlays.

16Interindustry transactions are recorded ‘free on board’ (fob), and each 

transaction has accompanying wholesale and retail margin costs. The BLS 

accounts update total trade margin 

costs by industry, but do not itemize 

the margins of each transaction, so the 

relevant BEA benchmark margin rates 

are assumed and scaled up or down for 

each industry to replicate the updated 

total margin costs.
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the set of row/column positions of these industries in the transaction matrix), 

we have:

 (A10) 0 new Z _ ttC ,tu =

Final market sales of the new trade utility commodity are similarly 

computed:

(A11) ( )( ) tu C C C C C rtC y S_we S_wg y_wt S_re S_rg y = + ⋅+ + ⋅ ¢ ¢

The appropriate portions of the proceeds in the new trade utility sales row are 

deducted from the wholesale and retail sales rows in the updated transaction 

matrix and fi nal demand vector. No trade or transportation margin costs are 

attributed to the utility outlay, so we have:

(A12) 0 tu y_tt =

Decouple the foodservice margins from food-away expenditures.

In the IO accounts, food-at-home expenditures are separately recorded as fob 

food commodity purchases, along with the trade margins associated with 

these purchases. Conversely, nearly all food-away purchases are recorded 

as expenditures on foodservices, where the food commodities are indirectly 

purchased as part of the service. To facilitate calculations of food dollar 

expenditures, the foodservices (fs) are decoupled from the food-away (fa) 

commodity purchases:

(A13) , new Z b_ fa Z C,fa C C ,fs = ⋅

(A14) . new new ZZZ C,fs C,fs C,fa = -

No value-added outlays are attributed to the new food-away industry:

(A15) 0, new

fa,P v_m =

(A16) new

fs,P fs,P v_m v_m . =

All intermediate and fi nal market sales of the new food-away and foodservice 

commodities are fi xed shares of the old consolidated foodservice commodity 

sales:

(A17) , new Z Z s_ fa, fa,C fs,C = ⋅

(A18) (1 ), new Z Z S_ fa fs,C fs,C = ⋅-

where s_fa is computed as:

(A19) 1 ( ) { } new C C , fa C C , fs fs,P P s_ fa i Z i Z v_m i . - =⋅ ⋅⋅ + ⋅ ¢ ¢
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The new trade and transport margin matrices are computed as:

(A20) new

C ,fa C. fs C Z_tt b_ fa Z_tt s_ fa , =⋅ ⋅

(A21) C , fs

new new Z_tt Z Z_tt . C ,fs tt C ,fa = -

Itemize total industry value-added outlays into primary factor payments to 

labor, other industry assets, and taxes on industry output.

Industry value-added tables of the BLS annual accounts are reported as total 

outlays to all primary factor owners. Both the BEA benchmark and annual 

accounts report primary factor payments to labor, other industry assets, and 

taxes on industry output. Because the 1997 and 2002 benchmark industry 

accounts map into the annual BLS accounts and are also used to benchmark 

the annual food dollar series, 1997 and 2002 primary factor payment shares 

calculated from the benchmark tables are applied to the BLS data for those 

years. For the years 1998 to 2008 (excluding 2002), primary factor payment 

shares calculated from the nearest benchmark year tables are applied to the 

annual BLS data to formulate initial estimates, 0

C,p v . A maximum entropy 

mathematical programming model (Golan et. al., 1994) is employed to reconcile BEA annual data with more aggregated commodity group coverage 

(c+  C+) but more detailed factor payment coverage (p  P), and with BLS 

annual data having more detailed commodity groups (c  C) but more aggregated factor payment data (P).

Minimize,

(A22) 

1 0

0 () c,p

c C p P c,p

c,p

v

v Ln ,

v

-

Î Î

æ ö ç ÷ ç ÷ ⋅ ÷ ç ÷ ç ÷ ç ÷ è ø

å å 

Subject to,

(A23) c,p c ,p c C+ v v c C ,p P , + + å Î

= "Î Î + 

(A24) . p P c,p c,p å Î v v cC  = "Î

A solution to the model in equations A22 to A24 replicates both the annual 

BLS total factor payment values and the annual BEA detailed factor payment 

share values, while producing the minimum percentage difference between 

annual factor payment estimates and the nearest corresponding benchmark 

factor payment values. Since each entropy distance measure in the objective function (equation A22) is weighted by the reciprocal of its preliminary 

estimate, the maximum entropy solution can be solved iteratively using a 

RAS-type algorithm (McDougall, 1999). This is benefi cial, since there are 

occasional negative primary factor value-added outlays that are handled more 

routinely using RAS.17

Identify and measure the proportion of each fi nal demand commodity 

outlay that meets the criteria for food dollar or food and beverage dollar 

expenditure.

17Splitting the primary factor payment 

matrix into its positive and negative 

elements allows proportional scaling 

of both matrices to adjust positive and 

negative values in the same direction.
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The BLS detailed fi nal demand table identifi es food-at-home and food-away 

personal consumption expenditures and their accompanying margin costs, 

denoted fh_pce and fa_pce. Some food commodity outlays and the margin 

expenditures associated with them are not of farm origin, including salt, 

certain food products of the chemical industry, and water products sold by 

food retailers. All remaining food commodity expenditures are part of the 

food dollar bundle (fd). Dividing the total fi nal demand into the food dollar 

produces the food dollar share value (including imports) of total fi nal demand:

(A25) 1 { } ( ( )) cc c C c S_ fd y b_ fd fa_pce fh_pce - =⋅⋅ +

If xC is a vector reporting total domestic availability (domestic production plus imports) of each commodity c  C, then the direct requirement 

matrix (AC,C) summarizes outlays of each domestic industry i I for each 

commodity c  C per unit of available industry product:

(A26) 1 { } new AZx C ,C C ,C C - = ⋅

The total requirement matrix, also called the Leontief matrix, is obtained as 

follows:

(A27) 1 { } L iA C ,C C C ,C - = -

From equations A27 and A25, total farm industry group (a) sales (including 

those from imports) required to accommodate total import-inclusive food 

dollar expenditures can be obtained as follows:

(A28) 

fd

C

fd

a a,C C C

y

x L S_ fd y

=

=⋅ ⋅ 

To avoid double counting of sales within the farm industry, all payments to a 

farm industry that are passed on and subsequently go directly or indirectly to 

another farm industry are netted out:18

(A29) 

where,

(A30) 0 ( ) k* k

a,a k a,C C ,C C ,a

ˆ

A A A A. = ⋅⋅ å =

In equation A30, Ak refers to the matrix product (e.g., A2 = A·A) and k* represents the exponent where the matrix product Ak*  0.

18For example, part of proceeds from 

broiler sales cover the purchase of 

chicks from a hatchery and animal feed 

from a feed manufacturer who, in-turn, 

purchased grain from a grain farm. ( ) ( )  

net fd fd fd

a a a,a a,a a a a,a a,a a

farm to farm farm to farm

direct indirect

ˆ ˆ x i A A x x A A x,

-- --

=- - ⋅ = - + ⋅
41

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

Economic Research Service/USDA

Supply Chain Analysis To Measure Value Components 

of the Food Dollar 

A matrix reduction procedure in IO analysis (Leontief, 1986, chapter 3) to 

facilitate supply chain studies produces a clean decomposition of industry 

cost contributions by supply chain categories. 

To demonstrate, organize industries/commodities into supply chain (sc) and 

non-chain (nc) groups respectively. The derivation for import-inclusive gross 

farm industry output in equation A28 is restated here, using the new supply 

chain partition:

(A31) fd fd fd

sc sc,sc sc sc,nc nc xL yL y = ⋅+ ⋅

Equation A31 states that total outlays of supply chain industries refl ect their 

total requirements to meet fi nal sales for the supply chain and the ‘non-chain’ 

commodities. This can be restated as a reduced supply chain input-output 

system by multiplying both sides through by the inverse of L

sc,sc and rearranging terms:

(A32) 

sc

1 1

y*

fd fd fd

sc sc,sc sc,nc nc sc,sc sc yLL yL x - -

=

+ ⋅ ⋅= ⋅ 

The innovation of this matrix reduction is the second inversion of the supply 

chain quadrant in the original total requirement matrix, L

sc,sc. It turns out 

that the second inversion of this submatrix produces the reduced structural 

supply chain matrix (see proof in Leontief, 1986):

(A33) 1 1 [ ( )]

*

sc,sc

sc,sc sc sc,sc sc,nc nc nc,nc nc,sc

A

L I A A iA A - -

=

=- + ⋅ - ⋅ 

The reduced structural matrix A*

sc,sc describes both the direct requirements 

of the supply chain interindustry purchases per unit of output and the supply 

chain industry requirements of the non-chain industries. Combining equations A32 and A33 and rearranging terms produces the supply chain inputoutput model:

(A34) 1 ( ) fd * *

sc sc sc,sc sc x iA y - =- ⋅

To use this model for conducting supply chain value-added analysis, the 

reduced supply chain primary factor value-added coeffi cient vector must also 

be obtained, and this is done using the same procedures applied to estimates 

of the reduced structural matrix: 

(A35) 1 [ ] * *

sc,P sc,P sc,sc nc,sc nc,P v_m v_m L L v_m - = + ⋅⋅ ¢ ¢

In A35, total primary factor value added of non-chain industries per unit of 

output for each supply chain industry is added to the supply chain industries’ 

direct value-added requirements. The resulting value-added coeffi cient vector 
42

A Revised and Expanded Food Dollar Series: A Better Understanding of Our Food Costs / ERR-114

Economic Research Service/USDA

captures the combined value contributions of each supply chain industry and 

the collective value added from all the subcontracted services. Supply chain 

analysis proceeds as follows:

(A36) ( ) * fd *

sc sc sc sc,P P i y i x v_m i ¢ ¢ ⋅ =⋅ ⋅ ⋅

Unlike conventional IO cost analysis, the vector within the brackets in equation A36 attributes total costs of fi nal market expenditures to a short list of 

supply chain industries. To the extent that non-chain industries contribute to 

market costs, these costs are attributed to supply chain industries by a precise 

measure of the ‘subcontracted’ non-chain industry services provided to each 

stage of the analyzed commodity supply chains.