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Per capita food expenditures declining around the world.

Abundant and relatively inexpensive food has contributed significantly to the high standard of living in the United States. Lower food costs enable Americans to spend less income on food and more on other goods and services or to save more. In 1989, Americans used a little under 10 percent of their total personal consumption expenditures (PCE) on food at home--the lowest share in the world.

"Food's share of total personal consumption expenditures" is the value of food purchased by consumers for at-home consumption relative to the value of all purchases for at-home consumption relative to the value of all purchases for personal consumption. This expenditure series is based on ERS data and national accounts data, which are provided by the United Nations for 44 economies (see box for a discussion of the data).

High-income Economies

Canadians, with a similar cultural and economic environment as the United States, spend 11.3 percent of their PCE for food and nonalcoholic beverages (Canada reports food and nonalcoholic beverage expenditures as a single value). Americans spend only 9.8 percent (table 1).
Table 1
U.S. Consumers Spent the Least on Food at Home
 Share of personal consumption expenditures
 Expenditures
 per
Economy Food Beverages Tobacco person
 Percent $US
High-income:(1)
United States 9.8 1.7 1.2 14,223
Canada 11.3(2) 2.7(2) 2.2 12,106
United Kingdom 11.6 7.2 2.2 8,952
New Zealand 12.2 3.2 2.4 7,680
Luxembourg 12.5 2.2 5.7 10,631
Netherlands 14.2 2.3 1.6 8,961
Denmark 14.7 4.0 2.6 10,698
Australia 14.8(2) 4.2 1.9 10,275
Belgium 15.7 1.8 1.5 9,303
France 15.9 2.5 1.2 11,241
Hong Kong 16.1 1.2 1.0 5,947
Sweden 16.2 3.8 1.9 11,298
Finland 16.2 4.8 2.1 11,615
Austria 16.3 2.7 2.2 9,204
Singapore 18.4 3.6 2.2 4,932
Norway 18.7 4.5 2.4 10,683
Italy 18.8 1.5 1.6 9,238
Switzerland 19.1 7.1 N.A(3) 15,209
West Germany 20.2(4) NA(4) 2.0 10,254
Ireland(5) 21.3 13.5 4.3 5,351
Spain(6) 21.6 2.0 1.6 4,748
Israel 24.0 3.0 1.4 6,051
Middle-income:(7)
Zimbabwe(6) 13.4 16.7 NA 278
Malaysia(8) 25.0 2.9 3.8 1,063
South Africa 27.0 6.8 2.4 1,282
Thailand 27.1 7.7 2.2 754
Colombia 28.4 5.0 1.0 706
Greece 31.3 4.2 3.6 3,860
Ecuador 31.7 3.8 2.1 583
Portugal(9) 34.1 2.3 2.4 1,869
Venezuela 35.5 3.7 1.9 1,160
Jordan(9) 37.5 1.3 1.9 1,334
Jamaica(5) 38.1 6.2 5.4 859
Honduras(9) 41.3 3.2 .6 582
Philippines 52.8 2.4 1.8 503
Low-income:(10)
Sri Lanka 49.9 2.6 5.8 301
India(5) 51.3 1.2 2.4 224
Sudan(8) 62.9 .6 1.2 588
Not classified:
Iceland(6) 15.6 4.7 1.9 13,898
Bahamas 17.4 2.3 .3 469
Puerto Rico 20.4 3.3 1.7 5,795
Fiji(6) 24.3 5.1 2.2 1,044
Malta 28.7 7.8 3.4 3,488
Cyprus(5) 30.1 4.7 3.1 3,724
Note: All information is from 1989 data, unless otherwise noted. NA = Not availa
ble. High-income co
World Bank, have an annual per capita gross national product (GNP) of $6,000 or
greater. (2)Food exp
beverages. (3)Beverages expenditures include tobacco. (4)Food expenditures inclu
de nonalcoholic and
(6)1987 data. (7)Middle-income countries, as defined by the World Bank, have an
annual per capita GN
than $6,000.11983 data. (9)1986. (10)Low-income countries, as defined by the Wor
ld Bank, have an ann


Other economies spend a similar share of personal consumption expenditures on food. Most are referred to as high-income economies. (The World Bank, in 1989, defined high-income economies as those that had an annual per capita gross national product (GNP) of $6,000 or greater in 1987). Each of these economies has desirable soil and climate, skilled workers, high-technology, infrastructure, and financing. Collectively, these factors enable their agricultural systems to produce and deliver a variety of food at competitive prices.

Only 4 of the 22 high-income economies included in the study have shares greater than 20 percent. The average share spent by high-income economies was 16.3 percent. Low shares, combined with a high level of personal consumption expenditures (which necessitates a high personal income), translate into substantial purchasing power and generate additional market demand and economic activity.

What's Behind the Estates Personal consumption expenditures cover money spent on goods (nondurable and durable) and services. Nondurable goods include gasoline, food, tobacco, and clothes. Durable goods, lasting over a year, include automobiles, televisions, and refrigerators. Services include rent, medical and recreational expenses; repairs; personal care; utilities; and transportation.

The gross national product (GNP) measures the total market value of national output. GNP can be defined in terms of goods and services provided or in the income generated in producing the goods and services. The measure for GNP is the same whether based on products made and services rendered or on income generated, because an expense for one person represents revenue for another. The product side of GNP consists of individual consumption (personal consumption expenditures), business and government purchases of goods and services, and investment. Sources of income include personal income (wages and salaries), rents and profits (money received from investments in plants, equipment, and residential buildings), and interest from financial investments.

Both of these measures are converted to a per capita basis, to account for population differences between countries.

What About Away-From-Home Food Expenditures?

Although we know that over a third of all U.S. food expenditures went for food consumption away from home in 1990, comparable international data do not exist. United Nations data, the source for this article, group the away-from-home food expenditures with motel and hotel expenditures.

Middle-income Economies

People in middle-income economies (having per capita GNP between $480 and $6,000 in 1987) spend for food, on average, $3.20 for every $10 of their personal expenditures. This food share is much higher than that of high-income economies, largely because per capita personal expenditures are much lower. However, only some farmers in middle-income economies have access to modem technology or an efficient infrastructure for moving goods to market. These inefficiencies add to the overall cost of production and marketing of food in many of these countries.

Over time, income in these countries rises. Their ability to produce food increases as access to modem farming technologies expands. At the same time, these economies invest more in transportation, processing, and distribution. Food supplies increase, and prices and the share of income spent on food decline.

Low-income Economies

In lower income countries, low productivity and a weak marketing system mean that much of the farm population is involved in subsistence farming. Consumers in these countries spend a large portion of their income on food.

For example, personal consumption expenditures for food in India, Sri Lanka, and the Sudan exceed 49 percent. People in the Sudan spend the most-almost 63 percent. These three countries, defined as low-income economies by the World Bank in 1989, have per capita GNP below $480.

Worldwide, Food Share of PCE Is Declining

Over time, an economy's prosperity and productivity of its food production and delivery system can affect its share of income spent on food. Over the past two decades, all but 4 of the 44 economies included in the study saw their share of income spent on food decline (table 2). On average, their share declined by 12.3 percent (changes in shares are weighed by a country's PCE in 1989 relative to U.S. PCE). But high-income economies experienced the largest decline, at 21.1 percent. Middle-income economies and low-income economies experienced declines of 1 and 0.2 percent, respectively.
Table 2
Food Expenditures Have Declined Over the Past Two Decades
Economy 1970 1980 1989
 Percent of personal consumption expenditures
 spent on food at home
United States 14.1 12.1 9.8
Australia(1) 18.5 16.8 14.8
Austria 26.1 19.9 16.3
Bahamas 24.1 17.5 17.4(2)
Belgium 24.1 17.5 15.7
Canada(1) 15.5 13.7 11.3
Colombia 33.4 32.0 28.4
Cyprus NA 29.5 30.1
Denmark 20.7 17.3 14.7
Ecuador 38.0 28.2 31.7
Fiji 24.0 24.1 24.3
Finland 24.2 20.9 16.2
France 21.0 17.5 15.9
West German 27.1 22.0 20.2
Greece 35.5 37.0 31.3
Honduras 40.7 41.3 41.3(5)
Hong Kong 34.4 21.7 16.1
Iceland 23.8 19.0 15.6
India 58.0 54.8 51.3(2)
Ireland 26.7 25.2 21.3
Israel NA 29.1 24.0
Italy 32.7 25.1 18.8
Jamaica NA 38.8 38.1(2)
Jordan 50.0 43.0 37.5(5)
Luxembourg 23.7 16.8 12.5
Malaysia 37.7 NA 25.0(6)
Malta 31.7 29.4 28.7
Netherlands 20.4 14.9 14.2
New Zealand NA NA 12.2
Norway 24.4 20.2 18.7
Philippines 51.9 59.0 52.8
Portugal 41.7 33.1 34.1(5)
Puerto Rico 23.7 23.5 20.4
Singapore 27.7 24.1 18.4
South Africa 23.5 25.1 27.0
Spain NA 26.0 21.6
Sri Lanka 54.2 51.1 49.9
Sudan NA 61.7 62.96
Sweden 20.8 17.7 16.2
Switzerland 21.8 20.1 19.1
Thailand 41.6 37.8 27.1
United Kingdom 19.9 16.4 11.6
Venezuela NA NA 35.5
Zimbabwe 25.8 20.9 13.4
Note: Data exclude expenditures on food away from home. NA = Not available. Foo
d
expenditures include nonalcoholic beverages. (2)1988 data. (3)1987data. (4)Food
expenditures
include nonalcoholic and alcoholic beverages. (5)1986 data. (6)1983 data.
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Date:Feb 1, 1993
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