Transcript Economic Measures - McGill University

Chapter 2: Economic Importance of Marketing
Activities
Value added – form, space, time
Conceptual and Measurement Issues
Sources:
Food Expenditure Data
Trends: food expenditures and consumption
Alternative Measures of Marketing Services
Price spreads
Other measures - GDP/employment
Conceptual and Measurement Issues (marketing services)
What is the concept you want to measure?
• data available correspond to the concept?
Aggregate Measurement Concept:
(aggregate food retail value - aggregate farm gate value)
Aggregate retail expenditures; aggregate agr output problems with implementation
Comparability of agr and food products
What is a retail food product ? (home, food service, institutional)
What is an agriculture product ? (pet food, tobacco, fibres - cotton/flax)
Industrial uses (ethanol, biodiesel, starch)
Data Sources: Food Expenditures
Different data sources are different – different objectives
United States
USDA - Agr. Marketing Service - ERS
US Dept of Commerce
Bur. of Labour Statistics
Canada
Agriculture and Agri-food Canada:
Statistics Canada
Health Canada
International:
FAO, IFPRI, World Bank, ILO
Private and Other Public Sources
Private Corporations: A.C. Nielson
Industry Organizations
University Institutions
Private “Think Tanks” (George Morris Center; Guelph)
Measuring Food Expenditures and the Value
of Marketing Agr + Food Products
Conceptual Issues
What’s an Agri-Food Product?
What is included?
Fish, beef bones, Pet food, cotton, hemp
Beer/Wine Spirits, ethanol, biodiesel
Practical Challenges:
working with the data you have
Individual Food Products Measurement
Concept
Tomato on farm versus tomato at retail
Tomato => many products (pizza)
Challenge: Converting from primary to processed
Joint production - co-products
Beef (steak vs beef on the hoof)
Wheat (loaf of bread vs bushel of wheat
Food away from home
Adjustments for trade
Lettuce in a hamburger
Retail expenditure data
Excludes export marketing services
Includes import marketing services
US Retail Food Expenditure Data
Different expenditure data from USDA and Commerce Dept.
USDA – Concept 1: Total retail value of FOOD consumed in the USA
Purchases, donated, home-produced for human consumption–all sources
+ Government/business food services
USDA – Concept 2: Personal expenditure data
– excludes non-purchases & food provided to employees
– measures expenditures out of personal income
Department of Commerce Food
Expenditure Data
Personal Food Expenditures
Includes pet food, ice, prepared feed
Results in different proportion of disposable income spent on food
Changes in Food Expenditures
Role of marketing services
Expenditures on food and marketing are increasing
Growth in away from home consumption
More processing
Prices increasing (even adjusted for CPI)
Population growth
Some Canadian Data
2005 – Canadian food expenditures (AAFA)
$131 Billion – food & beverage (including alcohol)
$4K per capita (32 Million Population)
$ 71 B in grocery stores (66%)
$ 37 B in food service establishments (34%)
-------------$ 108 food expenditures
$ 24 B for alcohol
Canada – expenditures out of household income
1961 – 20% of household income on food and non-alcoholic beverages:
2005 – 9.3%
Changes in Consumption of Individual Products
1) Disappearance data
Production + (beg. stocks - end. stocks) + (imports - exports)
Defined for primary food commodities (beef, eggs, milk)
Approximate per capita consumption (waste is estimated)
Adjusted for industrial and nonfood use to estimate food consumption
2) Periodic household surveys
US - Bur of Labour Statistics and USDA
Canada - Statistics Canada; AC-Nielson (scanner data)
Expenditure weights for CPI
Nutritional status analysis
Data Sources - Food Expenditures
United States
USDA - Agr. Marketing Service, Economic Research Service
US Dept of Commerce, BLS
USDA food consumption (per capita) data system (2013 active)
http://www.ers.usda.gov/data-products/food-availability-%28per-capita%29-data-system/.aspx#.Ug6UbKyZaVY
Canada
Agriculture and Agri-food Canada:
Statistics Canada – Food Expenditure Surveys
Health Canada
Consumer Expenditures (2013 active)
http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1171288446081&lang=eng
1970 - 1996
Serecon Management Consulting - 2005, for AAFC
Alternatives to Aggregate Expenditure
Retail-Farm Price Spreads
Value of Marketing Services
Concept:
Calculated for individual products
(retail price - imputed farm values)
Imputed farm values
Farm prices and conversion factors
Practical Difficulties - adjustments
Multi-ingredient products
Co-products
USDA Market Basket Concept
Retail-farm price spread – set (Basket) of products
• retail prices for home consumption (no restaurants)
• excludes seafood, and nonalcoholic beverages
• Weighted by average quantities of food products purchased
Farm value based on farm prices
Difference = value of marketing services
Narrow range of products
Set of products relatively static
USDA Marketing Bill Concept
Share of consumer $ spent on marketing
1) Compute total retail food expenditures
– All/most food products (includes non-alcoholic drinks)
– includes away-from-home purchases
– excludes imports and seafood
2) Farm values - based on farm gate prices
(1) – (2) = Estimated value of marketing services
Farm Share of Retail Food Expenditures
Measures vary
market basket (static) or marketing bill (dynamic)
• what is included
• how pattern of purchases evolves
Market basket
=> higher farm share
Both measures => declining farm share
Based on 2007 USDA data
Other Economic Measures
Contribution to GDP
– Includes import and export marketing services
Employment
Schrimper provides US data
Canadian Data Follow
Revenues generated for each sector
An Overview of the Canadian Agriculture and Agri-Food System 2013, Research and Analysis Directorate,
Strategic Policy Branch, Agriculture and Agri-Food Canada, Ottawa. ISSN 1708-4164 2013
Canadian AAF System
Primary Agriculture 1.7% GDP
GDP: 8.0%
Marketing System
(2011)
6% (Post Farm-Gate)
$100 Billion Total GDP
An Overview of the Canadian Agriculture and Agri-Food System 2013, Research and Analysis Directorate,
Strategic Policy Branch, Agriculture and Agri-Food Canada, Ottawa. ISSN 1708-4164 2013
Employment: AAFS
12.5% (2.1 Million Canadians)
87.5% Marketing Activities
A few more numbers from the AAFC 2013 Report
Exports:
Imports
$ 40 Billion
$ 31 Billion
2011 Consumer spending:
food, beverages and tobacco
= $181 Billion
18% of personal spending
Spending on food and non-alcohol = 10% of personal household expenditures
Government support
to the AAF System (all levels) = $ 7.5 Billion (2011/12)
$2.7 Billion in program payments to primary agriculture
(PSE 2011 = 14%)
Research Support
(In real terms):
2011/12 $430 Million ($ 2002)
1990 $500 Million ($ 2002)