Being raised on a farm, my mother always told me that food is too cheap. As a child I would work hours picking strawberries, berries, and other fruit to sell at similar prices to the local supermarket. This would yield an hourly wage less than minimum wage once farm expenses were removed. This was depressing and thought we should charge more.
As I went through University and then moved out to start a career, I was thankful for low food prices. These low prices allowed me to eat a variety of foods and spend extra money on things that I wanted – a bicycle, gasoline, furniture for my apartment, etc. It also allowed me to save money for retirement and large purchases – which lead to the ability to save for my first house.
The fact is that food is cheap. According to a recent survey by Gallup, Americans spend an average of $125/week on food for their family. Adjusted for inflation, this is the cheapest food in the history of the US (and probably the world). The survey also found that young adults and higher incomes spend more on food, which probably is an indication of healthier food consumption, and ranged from $173-$180/week. In total, it was estimated that between $6500-$9400 is spent on food annually, which totals around 14% of the average American Family’s salary.
The availability of cheap food is a huge stimulus to the American Economy. As mentioned above, having lower food costs provides the opportunity to spend money on other items, which keeps the economy moving.
What would happen if food prices increased? Less money would be available for non-essential items. As an example, lets assume a 2% increase in food prices – which is pretty nominal. This would be an extra $130-$188 spent annually (using the numbers above). If that is multiplied by the 90 million American Families (~320 million/3.5), that would equal $11.7 -$17 BILLION USD that would be directed to food, not the purchasing of other goods or into savings. This would be a redirection of 0.1% of America’s total GDP, and would impact the growth of various services within the US.
Perhaps there is rationale for the Government to do what it can in order to keep food affordable.
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