America’s price of food more budget friendly than other countries

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It’s no secret that the price of groceries is on the rise, hitting American consumers deep in the pocketbook. In a recent USDA Economic Research Service report, the average American spent 6.6 percent of their household budget on groceries for home or 11 percent when eating out costs are factored in. Sound steep? Pakistanis shelled out 47.7 percent of their household budget on food costs.

click image to zoomFigure 1 Looking at Figure 1, trends show wealthier countries are able to spend less of their budget on food costs compared to poorer countries. However, there is variation due to eating out trends, food preferences and regional food prices.

“As countries get richer, they start spending more of their money on other things — like health care, or entertainment, or alcohol. South Koreans spent one-third of their budget on food in 1975; today that's down to just 12 percent,” says an extensive overview from Vox. “That said, this relationship doesn't always hold. It depends, at least in part, on what kind of food people favor, patterns of eating out, and the specific food prices and subsidy schemes in their country. Note that India spends a smaller fraction of its budget on food consumed at home than Russia, which is much richer. Likewise, South Korea spends a smaller share of its budget on food than wealthier Japan does.”

It’s noted on average Americans spend slightly less ($2,273) on their household budget on food consumed at home compared to Germans ($2,481). This is well below the French’s $3,037 expense and Norwegian’s total of $4,485 per year on food.

Vox concluded this is due to Europe’s tax system on food and U.S. farm subsidies lowering the price of food for the country.

“There are fierce debates about the downsides of industrial agriculture — as well as the desirability of subsidizing agriculture. But one thing this system has done fairly well is keep the sticker price of food at the grocery store down,” says Vox.

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Kentucky  |  July, 10, 2014 at 07:40 PM

A great story, though it neglects a key element that is an issue of tremendous importance to global health and ultimately stability. In the wealthy countries generally we have much more disposable income due to the lower costs of food, whether due to govt. subsidies (which in most discussions here are ignored as a part of the equation) or larger and more efficient markets. When some respond that "we" are feeding the world, the real issue is not the provision of food from the wealthier nations, but the absolutely horrible distribution of food to the vast majority who are poor. Let's not forget that wealthy people in Pakistan and other "underdeveloped" countries spend a much smaller percentage of their income on food than the poor of their nations; indeed, I would hazard a guess that it's probably closer to the U.S. average than anything (and I'll bet they buy a lot of imported luxury foods too). None of that has anything to do with govt. subsidy or market efficiency! How do we deal with that issue (assuming we want to)?

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