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 12 percent of household budgets on average. Among Federal Government outlays on farm and food programs, nutrition assistance far outpaces other programs.
Agriculture, food, and related industries contributed $1.055 trillion to the U.S. gross domestic product (GDP) in 2020, a 5.0-percent share. The output of America’s farms contributed $134.7 billion of this sum—about 0.6 percent of GDP. The overall contribution of agriculture to GDP is larger than 0.6 percent because sectors related to agriculture rely on agricultural inputs in order to contribute added value to the economy. Sectors related to agriculture include: food and beverage manufacturing; food and beverage stores; food service and eating and drinking places; textiles, apparel, and leather products; and forestry and fishing.
In 2020, 19.7 million full- and part-time jobs were related to the agricultural and food sectors—10.3 percent of total U.S. employment. Direct on-farm employment accounted for about 2.6 million of these jobs, or 1.4 percent of U.S. employment. Employment in agriculture- and food-related industries supported another 17.1 million jobs. Of this, food service, eating and drinking places accounted for the largest share—10.5 million jobs—and food/beverage stores supported 3.3 million jobs. The remaining agriculture-related industries together added another 3.3 million jobs.
With an 11.9-percent share, food ranked third—behind housing (34.9 percent) and transportation (16 percent)—among the expenditures of the average U.S. household in 2020. Compared with 2019, shares for food, transportation, entertainment/ alcoholic beverages, apparel, education/ reading, and “other” categories of spending fell slightly in 2020, and shares for housing, personal insurance/ pensions, healthcare, and savings rose slightly.
In 2019, the U.S. food and beverage manufacturing sector employed 1.7 million people, or just over 1.1 percent of all U.S. nonfarm employment. In thousands of food and beverage manufacturing plants located throughout the country, these employees 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 beverage plants.
USDA outlays increased by 48 percent from fiscal 2006 to fiscal 2015 (fiscal years begin October 1 and end September 30), with the largest increase coming from food and nutrition assistance programs, which grew especially fast since fiscal 2008, reflecting higher recession-related participation and a temporary increase in per-person benefits from the Supplemental Nutrition Assistance Program (SNAP). An improving economy and expiration of the larger SNAP benefits caused growth of food and nutrition assistance program outlays to slow by fiscal 2012 and decrease in fiscal 2014. Outlays on Federal crop insurance also decreased in fiscal 2014 as extreme weather events subsided and crop prices declined. Commodity program outlays declined in fiscal 2015 with the passing of the new Farm Act in 2014. Food and nutrition assistance accounted for more than 73 percent of USDA outlays in fiscal 2015.