Food Supply, Food Shortages

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FOOD SUPPLY, FOOD SHORTAGES. A nation's food supply is determined by composition and selection. The components of a food supply are limited by a number of factors, primarily climate and geography. The U.S. food supply is noticeably different from that of other nations as the twenty-first century begins. Americans are more likely to recognize food products than the specific ingredients in the seemingly endless array of products on supermarket shelves (some supermarkets stock over forty thousand different items). Fast-food outletsa McDonald's, Taco Bell, or a Subway sandwich shopare more recognizable than a steer, hog, chicken, or a bushel of wheat. Most such foods are slaughtered, processed, manufactured, and packaged; few are sold in bulk, as was common before World War II. Nearly all foods are shipped from distant places on pallets or in large containers, transported to huge warehouse storage facilities or to freezers close to cities, and trucked from there to be unpacked and displayed on supermarket shelves or served in fast-food outlets.

The United States enjoys a temperate climate especially hospitable to agriculture that supports the production of a wide variety of grains, fruits, and vegetables as well as milk, meat, poultry, and fish. Within the U.S. landmass, soil conditions and characteristics ensure an abundance of available farm acreage, which, in turn, assures a profuse supply of foodso much so, in fact, that the U.S. Congress authorizes programs that pay landowners to keep portions of their farmland lying fallow. Purchasing, storing, and maintaining food surpluses cost taxpayers more than paying farmers not to produce, making payments to idle farm acreage the cheaper alternative. Income also is a significant element in the composition of the food supply.

Composition of the U.S. Food Supply

Americans are among the wealthiest populations of the world, and their wealth enables most U.S. citizens to purchase from abroad any food not available from U.S. agriculture or fisheries. The United States is a magnet for the world's food supply, drawing an endless trade caravan of meats, pastas, spices and herbs, sauces, cheeses and other dairy products, wines and spirits, cakes and crackers, and fish as well as exotic and conventional fruits and vegetables, mostly fresh. While income is a means of expanding the selection of foods available in an indigenous food supply, income more often is a limiting factor in the availability of food in a population or in subgroups within a population.

Low-income families and individuals in the United States, for example, have a more limited food supply than do those with middle or higher incomes, although public policies today ease income barriers to a more adequate food supply by supplementing the purchasing power of low-income families and individuals. Still, even with the assistance provided by food stamps and other government programs, including school meals for children, low-income households can afford less for food than higher-income families, some $1,000 less annually per person, and, as a result, consume food measurably lower in nutritional value.

Populations in poor countries (euphemistically called "less developed countries" [LDCs]), in contrast, are limited by income to the food supply readily available where they live. Trade in either conventional or exotic foods is not an option, since many of the world's poor live out-side a conventional marketing system. As a result, most citizens of LDCs grow or raise most of their food themselves, although imports are becoming increasingly important. In central Africa, for example, the food supply consists of locally produced staple foods such as maize, cassava, sweet potatoes, banana, millet, sorghum, and yams. Traditional vegetables, including the leaves of cassava and sweet potatoes, provide the vitamins and minerals otherwise largely lacking in these staple foods.

Food Supply: Sources

Cereals provide 69 percent of dry matter and 55 percent of the protein in the world's food supply by weight. Legumesfor example, beansprovide another 6 percent of dry matter and 13 percent of protein (Allard, 1999). Vegetables, fruit, meat and poultry, eggs, fish, nuts, sugar, and other sweeteners, in that descending order, provide the rest. People living in the United States and the countries in the European Union, as well as Canada, Japan, Australia, and New Zealand, consume a food supply with larger proportions of meat and poultry, dairy products, fruits and vegetables, fish, nuts, sugar, and oils and fat, a diet that delivers a substantially larger caloric load than that typically available in poor countries.

As personal incomes rise, the diet of individuals and nations shifts from basic food sources to those that provide a higher level of energy, or caloriesanimal products, more highly processed prepared foods, and oils and fat. Grains drop out of the human diet to become animal fodder as incomes rise, especially maize, oats, millet, and sorghum, which are then categorized as feed grains. Replacing grass and hay (traditional animal fodder), feed grains are fed to cattle, hogs, and chickens instead, reentering the food supply as beef, pork, poultry, milk, and other dairy products. Fish farming, or aquaculture, has emerged as a commercial source of freshwater fish and seafood in the last decade, and as a user of feed grain in rations fed to fish raised in underwater pens. Wheat is the major food grain in the United States, although rice consumption is increasing with the rising proportion of Americans of Asian and Latin American descent, for whom rice is the major food grain.

The food supply varies by nation and by geographic region, reflecting religious beliefs as well as cultural practices. Devout Muslims and Jews do not eat pork. Koreans, Chinese, Vietnamese, and other citizens of Southeast Asian nations consider both dogs and cats enjoyable sources of animal protein, and horsemeat, a staple in pet food in the United States, is a delicacy eagerly consumed by the French and other Europeans.

During the 1990s, the American people increased spending on food consumed outside the home by nearly 25 percent, a whopping increase compared to the 4 percent growth in consumption of food prepared and eaten at home during the same period.

By the end of the twentieth century, the U.S. was unable to visualize the source of its food supply from an agricultural perspective, that is, in terms of basic food groups, because a majority no longer live on farms. Instead, food had become an endless array of food products typically found on supermarket shelves, especially those that stock over forty thousand individual items. Most such foods are processed and packaged, and few are sold in bulk as was common sixty years ago. Nearly all were shipped from distant places, packaged in large containers, transported to huge warehouse storage facilities close to cities and metropolises, and trucked from there to be unpacked and displayed on supermarket shelves.

Transporting the food supply long distances requires that foods arrive in a "safe" condition, meaning that they will cause no harm when eaten. Processing and packaging are traditional methods essential to safely preserving food ingredients, either by drying fresh fruits and vegetables, fish, meat, and poultry, by freezing them, or by cooking and canning them before they are transported and distributed. Food processors and manufacturers strive to convince the public of the differences between brands through advertising and promotion, but the only differences are frequently superficial marketing "hooks" introduced to change consumers' perceptions of products in order to capture a larger share of their food dollars. Price competition keeps profit margins low. Basic ingredients do not change, but that fact can be hidden. For example, any breakfast cereal can be made to appear different and more appealing by producing it in different shapes or adding sugar, dried fruit, essential vitamins and minerals, or new flavoring or colors. Newly designed packaging, announced by a new advertising campaign, will successfully persuade consumers that the product itself is new and different.

A successful promotion is intended to achieve better differentiation of individual products, a product virtue that is more important than nutritional value. Processors do not ignore nutrition, however, especially if it has the virtue of enhancing product differentiation. Differentiation of a product is an essential marketing function that enables a food company to charge U.S. consumers more for, or to sell more of, a basic food grain than might otherwise be possible. The availability of forty different packages of a breakfast food containing corn cereal in the breakfast food section of the supermarket is not intended to provide variety for consumers. The goal is to divide the market into increasingly smaller segments within which more can be charged per ounce than can be extracted from consumers for simple cornflakes. The same segmentation game can be played in every category of processed food. Differentiation ensures that food companies do not compete on the basis of price, traditionally the distinguishing feature of an openly competitive, free market in capitalist systems. New food products quickly come and go, but the basic ingredientsflour, fat, sugar, flavoring, coloring, and preservativesremain unchanged. An estimated twelve thousand new food products are introduced annually, and fewer than a hundred will remain on supermarket shelves after five years.

Food processors and supermarkets, squeezed by restaurants and fast-food companies into a smaller portion of the commercial food market, have defended their share of the food supply by developing products that contain the main entree of a meal or a full meal packaged in dried or frozen form. Breakfast cereals come in small packages containing a single portion. Different recipes are devised for wheat flour, fat, sugar, jams and jellies, and artificial flavoring in partially baked pastries that can be heated in the kitchen toaster as a breakfast food or as a snack, for example. Full meals are packaged frozen, to be heated in a microwave and served as a quick lunch or dinner.

As a food category, the entree items and full meal products can be differentiated from other food products, enabling food processors to charge a higher price for a product than its often meager ingredients would bring if sold individually. Within the packaged meal category, product differentiation tactics often promote convenience as well as health benefits, both strong personal objectives, especially among individuals in the upper-middle and higher income brackets, the primary targets of advertising and promotion campaigns. Supermarkets over the past decade have given more floor space to and hired more employees for deli counters that offer convenience foods as well as whole meals, or home-meal replacements.

Needless to say, advertising, promotion, product development, and packaging design are not free services. They are the cost of marketing the food supply in a postindustrial society and a service economy. While the proportion of the food dollar spent to eat out grew from 44 percent in 1990 to 47.5 percent by the end of the twentieth century, consumer spending for food increased by 37 percent, with marketing costs responsible for almost all of the increase. Marketing costs in the decade rose 45 percent, compared to a rise of 13 percent in the farm value of food purchases. Marketing consumed 80 percent of the trillion-dollar cost of the food supply system in the United States, leaving the actual value of the food supply at $200 billion, or 20 percent of the operational cost of the food system as the twenty-first century began. As some corn growers mournfully point out, the cost of the package containing cornflakes is more than the farmer is paid for the ingredients.

These shifts in how money is spent for food reflect seismic changes in the social tectonics of the U.S. economy at the end of the twentieth century. Among citizens of developed countries globally, Americans alone were working more hours each week as the century ended than when it began. Employment during the 1990s rose faster than in any decade since the end of World War II. The structure of the nation's workforce changed as well. The number of two-income households rose as more women entered the workforce, and wages grew faster, even as inflation declined.

The consequences of more real income and less leisure time drove changes in the food supply system. Consumers purchased more food overall, but more higher-cost processed and packaged in-home foods. The practice of spending to eat out at restaurants grew rapidly, especially at fast-food outlets. As the twenty-first century began, the money spent on fast food consumed nearly one of every four dollars spent to eat out. Only a decade earlier, in comparison, one dollar in ten was spent on restaurant meals. Wages and employment in the food supply system rose, all in response to the search for convenience.

Consumers were working more, earning more, and willing to pay more for convenience and for appliances like the microwave, which made convenience foods more convenient. By the end of the twentieth century, only one in three U.S. consumers said their food budget was a primary consideration in food purchases, while the other two said service and convenience topped their list. Oddly, as convenience became the hallmark of the U.S. food system in the twenty-first century, more space and attention was being given to kitchens in new home designs, especially as the size and amenities in homes increased. In addition, kitchen utensils with as much decorative appeal as utility were being featured in upscale department stores and shops catering to consumers aspiring to culinary sophistication.

The prosperity at the end of the twentieth century, combined with the largely benign condition of inflation, led to an effective overall reduction in the portion of disposable income spent on food in the United States. At the close of the 1990s, U.S. households were spending 10.4 percent of disposable personal income on food, down from 11.4 percent in 1990. Household spending in 1999 was greater in four expenditure categoriesmedical care, housing and home expenses, transportation, and servicesthan it was in the category of food, for one simple reason: with each additional dollar of income, the share of family income that must be spent on food is less than the share from the previous dollar. As real income rises, more family income is available for other needs. Wealthier families allocated far less by half than 10 percent of disposable income to food, while families at the lower end of the low-income category were spending up to 40 percent of their disposable income on food.

The Immutable Economics of Food

Regardless of the marketing ingenuity of food processors and supermarkets, or the culinary talent of restaurant chefs, the food system cannot escape the reality of the inflexible economics of food. The typical stomach can hold only a finite amount of food. After a certain point, the stomach becomes inelastic; the same is true of the economics of food. To put a finer point on the observation, an individual who has not eaten for twenty-four hours may be willing to pay twice the asking price for a tempting meal, but, once the meal has been eaten, few individuals will pay a dime more to consume the same meal immediately.

Food also obeys the law of inelasticity. The need for food is constant, and people who are starving will pay almost anything, do anything, to get enough to eat. Survival depends on a minimum intake of food, averaging between 1,800 to 2,400 calories per person daily, that will also ensure adequate levels, or stores, of essential oils, fats, vitamins, and minerals. Humans can, and do, survive on less, but at a physical and physiological price measured in stunted growth and susceptibility to chronic and infectious diseases. When food is scarce, food prices will increase; the more scarce food becomes, the more rapid the escalation in food prices.

When food is plentiful, in contrast, people will not pay more to obtain greater amounts of food than they need. Farmers who harvest more food than can be easily sold will be paid a substantially lower price for all the wheat, maize, rice, or hogs and cattle they sell in the market than they would receive without the excess production. When each farmer produces only slightly more one year than the last, the combined surplus can be so large as to devastate the income of all farmers, a condition that plagued U.S. agriculture for much of the twentieth century and now looms as a global condition. Farmers cannot withhold their individual surpluses since the amount is too small to make a difference, but each farmer suffers measurably when the overall surplus is so large that commodity prices fall and profits are destroyed. No individual, cooperative, or company has the resources to acquire and store the excess food.

Farmers, food processors, and consumers each cope differently with the inflexible fact of inelastic stomachs, all with varying degrees of government intervention. With a food supply in which the value of food accounts for only 20 percent of the cost of the system, food processors have the comparative advantage of size and few competitors. Consolidation among competitors occurred rapidly at all levels in the U.S. food supply system in the 1990s, thanks to the benign attitude of the federal government toward anticompetitive behavior, creating a marketplace with enormous advantages for the survivors. The massive size of food processorsfour companies essentially control processing of beef and pork, three companies dominate the poultry industry, and even these seven firms are exploring further consolidationallows processors to largely control what they will pay to producers.

Although commodity prices in the United States are low by all historic standards, the cost of food is not as significant a factor for company management as stability of supply and the ability to either stabilize (fix) the cost or negotiate the price of ingredients. Processors with few competitors need to fix the cost of ingredients over the life of the marketing plan for a food product. Those costs will be only one factor to consider in setting the level of product prices in the development of marketing strategies that will produce a profit. With price competition virtually eliminated for grocery food items, the price obtained through product differentiation is the dominant management concern.

From the consumer's perspective, food costs are actually declining as a portion of rising household income, and food price inflation is largely absent. Both conditions are substantially influenced by government fiscal and monetary policy. As long as these conditions prevail, consumers are less likely to be upset about the growing market power of food processors than they would be if food price inflation were escalating as much as it did in the 1970s. As odd as it sounds, inflation is not a food supply issue today because of the convenience factor. Food processors and supermarkets would inflate food prices if they could, but restaurant and fast-food outlets would take a bigger share of food spending if they did. As long as consumers choose to eat out more, the food industry is stymied by the competition over market share from restaurants and fast-food outlets. Processors and supermarkets have yet to develop an effective counterstrategy to the competition of convenience and are unable to raise prices as much as they would like. With the consumer food dollar almost evenly split between eating out and eating at home, the food processor is being forced to get by with a smaller piece of the pie, so to speak. Consolidation in the processing industry is an inevitable response, dividing the consumer dollar among fewer participants.

An additional factor limiting the ability of the supermarket industry to raise food prices is a recent invasion of competitors, especially from "big box" discount retailers. Both Wal-Mart and Target are rapidly adding grocery merchandising sections to their existing stores and building new stores that emphasize groceries and food. As a result, supermarkets are being pressured not only by restaurants and fast-food outlets, but also by competition from discount stores. Supermarkets are taking the pragmatic approach, "if you can't beat them, join them," by marketing whole meals prepared in the store. While seven of every ten take-out meals sold in 2001 came from fast-food outlets, supermarkets accounted for almost two of ten, leaving the remaining one percent of the take-out market to restaurants. As long as consumers have the disposition and the disposable income to eat at restaurants or fast-food outlets, they also have the most effective strategy for playing suppliers in the food system against another.

Farmers cope with the changing trends in the food supply system with the one tool still available to them, aid from the federal government. In 1995, Congress enacted legislation to end government intervention in agriculture by phasing out income-support programs. However, when farm incomes fell in 1998 and in the following years, Congress quickly authorized emergency income payments and added another $30 billion over the next three years to already generous subsidies and government payments. In 2002, the first new farm legislation of the twenty-first century was adopted. The most generous in the sixty-year history of farm programs, the new legislation provided income support payments to farmers of over $19 billion a year for the following ten years. The scale of the subsidies allocated by Congress is unparalleled. Legislators in Washington have guaranteed that American farmers will receive nearly $200 billion in income payments over ten years, the equivalent of the farm share of annual consumer spending for food. Over 90 percent of farm output in the United States was harvested by some 200,000 farm operators who would receive most of the $19 billion in annual farm income payments. Globally, agriculture production is rising, a condition that experts predicted would drive down farm commodity prices further. If this pattern develops during the twenty-first century, even greater expenditures for farm support could be made by the federal government than had been projected under the existing farm legislation.

Immutable Law of Nutrition

If the food supply is governed by the economics of inelastic stomachs, it is also bound to the immutable law of nutritional consequences. People consume food because of an instinct for survival, but life can be put in harm's way either by too little food or by eating too much food. People die of both starvation and gluttony. Nations are similarly at risk. If citizens, threatened by food shortages or famine, confront a food supply insufficient to fill shrunken stomachs, anarchy may ensue. A nation faces a no less compelling array of social, economic, and political problems when it confronts a food supply that is grossly greater than is needed. Surpluses can destroy the farming economy. If the nation dumps its surpluses on its neighbors, professing humanitarian impulses, the policy will destroy its neighbors' farming systems. If national leaders exhort people to eat their way out of the problem, or even if the surpluses are transformed into meat, poultry, and other forms of animal protein, then people will become overweight. In addition to surpluses, health costs will increase as well, and the national budget for health services will rise because obesity is a precursor to chronic diseases and overweight individuals are at risk of early death.

The U.S. public has come to accept that malnutrition is the consequence of too little food for too long a time. But malnutrition has two faces. It is a Janus-like condition of nutritional extremes, of either undernourishment or overnourishment, both of which may occur at the same time in a single population. In the United States and other developed countries, classic malnutrition, or undernourishment, most often occurs in predictable groups: women, children, the elderly, and the poor. The cause may vary, but malnutrition almost always accompanies poverty, which occurs more frequently among these groups. Women are paid less than men for equal work, while four of every ten children live in poverty in the United States, where fewer than two of every ten families are poor. The proportion of the elderly who are poor continues to be greater than should be the case.

Malnutrition of the poor is not evident since under-nourishment has few immediate, unique characteristics, although the condition will be visible eventually in the rising levels of infectious diseases, diarrhea, and tuberculosis. The overt signs of starvation, such as stunting, failure to thrive, kwashiorkor (extreme protein malnutrition, especially in children), or marasmus (chronic malnutrition, especially in children), are generally indicative of severe, widespread hunger throughout a population in which malnutrition already is extensive. Undernourishment in the United States, or in other highly developed nations, is not caused by food shortages but, instead, by barriers, almost always poverty, that block access to the food supply. There was no shortage of food in the world at the beginning of the twenty-first century, nor is there in the foreseeable future. Since the 1960s, the United States has established a series of federal nutrition programs to increase access to the food supply for groups of citizens at risk of hunger, including low-income families, children away from home, mothers and their infant children, and the elderly. The Food Stamp Program is intended to assist families and individuals, especially during rising unemployment and in seasonal periods when work is not available. The program also reaches families troubled by chronic unemployment and families in which the parents hold down two or more jobs but still earn only a poverty-level income. At peak unemployment in the early 1990s, nearly 25 million Americans were participating in the Food Stamp Program.

School meals, which include breakfast and lunch, are subsidized and served each day to more than 50 million schoolchildren, and schools receive additional subsidies to provide meals at nominal or no cost to over half of these children. Some 7 million mothers receive monthly certificates through the WIC (Women, Infants, and Children's) program to purchase infant formula and additional foods that provide nutrients needed especially by pregnant women and lactating mothers. The WIC Program also offers nutritional counseling and health information on pregnancy to expectant mothers. Over 2 million older Americans daily receive hot meals at nominal prices delivered to their homes or served in community centers through subsidies provided by the Older American Nutrition Program to community organizations. During the economic slowdown in 1991 and 1992, the federal government was spending over $40 billion a year on nutrition programs, including $27 billion on food stamps alone.

The unique characteristics of the U.S. food supply compared to other nations occur most notably in public policies. While the United States and the European Union both subsidize their farm economies generously, other countries possess neither the wealth nor the political commitment to match this. At the beginning of the twenty-first century, the United States was projected to spend $200 billion over the next decade in farm income payments, and an estimated $350 to $400 billion for food assistance. No other nation allocates as much overall or as a percentage of its gross national product to ensure access to food for the poor as does the United States. The U.S. government has taken a benign view of economic concentration in the food system, permitting the accumulation of economic power among a few corporations in every sector of the industry, ranging from livestock slaughter to poultry processing, farm equipment and chemicals, as well as food manufacturing and retailing. The European Union, in comparison, is more vigilant regarding competition as an economic force in a free enterprise system.

See also Agriculture since the Industrial Revolution ; FAO (Food and Agriculture Organization) ; Fast Food ; Food Banks ; Food Pantries ; Food Politics: United States ; Food Security ; Food Stamps ; Food Supply and the Global Market ; Food Trade Associations ; Government Agencies ; High-Technology Farming ; Homelessness ; Hunger Strikes ; International Agencies ; Political Economy ; Poverty ; School Meals ; Take-out Food ; WIC (Women, Infants, and Children's) Program .

Rodney E. Leonard


Malnutrition affects about 600 to 800 million people in the world, most of whom live in Africa and Asia, where food shortages occur more frequently and the food supply is tenuous and unpredictable. In Africa, the major cause is unstable governments combined with uncertain weather, a lethal social combination that undermines efforts to develop a more reliably productive agriculture capable of increasing domestic food production. Food assistance, mainly through the World Food Program, which distributes surplus food from developed countries, has been established worldwide to fill the calorie gap. However, food assistance treats the symptom, not the problem, and aggravates the search for long-term solutions by disrupting the agricultural economy when it is most vulnerable by displacing domestic markets.