Economics: 27% of global food expenditure reaches farmers

27% of global consumer expenditure on food is received by farmers, according to a paper published in Nature Food. The largest share ends up in the post-farmgate value chain (once the product leaves the farm). These findings may help inform public policies aimed at a more equitable distribution of food revenues.

Food supply chains encompass production, processing, distribution and consumption. Implementing well-targeted interventions along the way is essential for the design of incentives and regulations needed to achieve several sustainability goals. However, supply chain segments and their magnitude — especially relative to other countries or sectors of the national economy — have been poorly understood.

Building on a similar method originally applied to the USA, Christopher Barrett and colleagues developed a universal, standardized approach to estimate the importance of food value chains between farmers and consumers, known as the ‘global food dollar’ method. This method was then applied to a large dataset encapsulating 61 middle- and high-income countries over 11 years (2005–2015), covering approximately 90% of the global food economy. Besides revealing that, on average, farmers receive less than a third (27%) of what is paid for foods consumed at home, the findings indicate that this share tends to be far lower in the case of food expenditures away from home. The share also tends to drop significantly as national incomes rise.

The authors conclude that the large and growing post-farmgate food value chain merits greater attention as the world grapples with the economic, environmental and social impacts of food systems. This is particularly true in the face of urbanization and income growth, which is expected to favour longer supply chains and more processed food products.