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Ag and Food Sectors and the Economy

The U.S. agriculture sector extends beyond the farm business to include a range of farm-related industries. The largest of these are food service and food manufacturing. Americans’ expenditures on food amount to 15 percent of household budgets on average. Among Federal Government outlays on farm and food programs, nutrition assistance far outpaces other programs.

 
Agriculture and agriculture-related industries contributed $775.8 billion to the U.S. gross domestic product (GDP) in 2012, a 4.8-percent share. The output of America’s farms contributed $166.9 billion of this sum—about 1 percent of GDP. The overall contribution of the agriculture sector to GDP is larger than this because sectors related to agriculture—forestry, fishing, and related activities; food, beverages, and tobacco products; textiles, apparel, and leather products; food services and drinking places—rely on agricultural inputs in order to contribute additional value to the economy.
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With a 12.9-percent share, food ranked third behind housing (33.6 percent) and transportation (17.6 percent) in a typical American household’s 2013 expenditures.  Food’s share of consumer expenditures is down from 15 percent in 1984, as the share of income spent on housing, health care, and entertainment each rose slightly.
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In 2012, 16.5 million full- and part-time jobs were related to agriculture—about 9.2 percent of total U.S. employment. Direct on-farm employment provided over 2.6 million of these jobs. Employment in the related industries supported another 13.9 million jobs. Of this number, food services and drinking places accounted for the largest share—10.8 million jobs—and food manufacturing supported 1.5 million jobs. The remaining agriculture-related industries together supported another 1.5 million jobs.
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In 2011, the U.S. food and beverage manufacturing sector employed about 1.5 million people, or just over 1 percent of all U.S. nonfarm employment. In almost 30,000 food manufacturing plants (as of 2007) located throughout the country, these 1.5 million workers were engaged in transforming raw agricultural materials into products for intermediate or final consumption. Meat and poultry plants employed the largest percentage of food and beverage manufacturing workers, followed by bakeries, and fruit and vegetable processing plants.
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USDA outlays increased by 70 percent between fiscal years 2004 and 2013. (Fiscal years begin October 1 and end September 30.) Expenditures for nutrition assistance rose the most, particularly after 2008, as program changes and tough economic times led to increased participation, but improvements in the economy led to lower outlays in 2013.  Outlays on commodity programs fell nearly 60 percent from 2004 to 2013 as higher market prices reduced payments to producers. With the reduction in outlays for commodity support, the agriculture sector has relied more on the marketplace for its income. Conservation and crop insurance spending also rose slowly, particularly since 2008, but crop insurance outlays jumped nearly 40 percent in 2013, reflecting the effects of the 2012 drought.
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Last updated: Tuesday, November 25, 2014

For more information contact: Lewrene Glaser and Rosanna Mentzer Morrison