Public Policy Issues and Research
ERS has conducted research on major public policy topics related to the retail food industry, including access to affordable and nutritious food, the effect of prices on healthy food choices, trends in the food marketing system, and the development of local food systems.
Over the past two decades, private label food products have grown steadily in sales and often compete directly with national brands for market share. This competition lowers prices and increases product choices for consumers. This report (see link below) analyzes the relationship between private label and national brand product prices and in-store promotions for two major U.S. grocery store chains during the 2007-2009 recession and the year (2010) following the recession:The Relationship Between National Brand and Private Label Food Products: Prices, Promotions, Recessions, and Recoveries
Research on food affordability found that food prices vary depending on the location and type of store. National comparisons of identical items showed that discount store prices averaged 7.5 percent lower than prices in traditional food retailers such as supermarkets, and discount store prices were 3 to 28 percent lower among individual food items. Within metropolitan areas, price differences between nontraditional stores such as supercenters, warehouse club stores, and dollar stores also varied by their combined market share. In high-market share cities such as Atlanta and San Antonio, the average price difference was 5.3 percent, while in low market share cities such as Philadelphia and New York, the average price discount was 11.5 percent. See:How Much Lower Are Prices at Discount Stores? An Examination of Retail Food Prices
Promotions can also increase fruit and vegetable consumption. ERS compared the effects on expenditures of coupons and price discounts, two methods of lowering the cost of fruits and vegetables. Researchers found that coupons influence consumer behavior through a price-discount effect and an informational/advertising effect. Lowering prices through a "10 percent off" coupon would increase average weekly quantities purchased of fruits and vegetables by 2 to 11 percent, compared with 5 to 6 percent for a pure price discount. See:Promoting Fruit and Vegetable Consumption: Are Coupons More Effective than Pure Price Discounts?
Consumer interest in the availability of food that is produced, marketed, and consumed locally is rising throughout the United States. ERS research on local food systems explored the distinguishing traits of local food products and the characteristics of local food production and distribution systems. The study provides a comprehensive overview of local food systems, including alternative definitions, estimates of market size and reach, the characteristics of local food consumers and producers, and an examination of early evidence on the economic and health impacts of such systems. See:Local Food Systems: Concepts, Impacts, and Issues
A recent article on access to healthful, affordable food documented the extent to which low-income households and neighborhoods lack access to affordable and nutritious food. The study used walking distances in urban areas to the nearest supermarket or large grocery store to measure access. In rural areas, driving distances were used to measure the level of access, under the assumption that households have access to a vehicle. Spatial analysis methods were employed to identify both low-access and low-income areas. The study found that in the United States, 23.5 million people live in low-income neighborhoods and have low access (live more than 1 mile from the nearest large grocery store or supermarket). Of that total, 11.5 million persons, or 4.1 percent of the U.S. population, had household incomes less than twice the Federal Poverty Level, which qualifies them as low-income. The study also found that 1.1 million rural households did not have use of a vehicle and had low access. See:
ERS researchers also investigated the effects of prices on fruit and vegetable consumption by determining whether a price subsidy would encourage low-income Americans to consume more of fruits and vegetables. They estimated that a 10-percent subsidy would encourage low-income Americans to increase their consumption of fruits and vegetables by 2.1 to 5.2 percent, depending on consumer sensitivity to prices. See:Fruit and Vegetable Consumption by Low-Income Americans: Would a Price Reduction Make a Difference?
ERS researchers also examined whether households that receive food and nutrition assistance benefits can afford a healthy diet. They found those participants that qualify for the maximum benefit based on household composition can afford a healthy diet, while those that receive partial benefits may have more difficulty. For many Americans, achieving an affordable healthy diet will require reducing their expenditures on less nutritious foods. See:
Research on the role of prices in consumer food choices was initiated due to concerns about obesity and obesity-related health issues. ERS studied regional food price differences and their effect on affordability for low-income households that participate in the Food Stamp Program, now called the Supplemental Nutrition Assistance Program (SNAP). Findings reveal that a family of four in the East and West regions could spend $32 to $48 more per month on food than the national average. In contrast, households in the South and Midwest could spend $12 to $28 less per month than the average U.S. household. See:Can Food Stamps Do More to Improve Food Choices? An Economic Perspective-Stretching the Food Stamp Dollar: Regional Price Differences Affect Affordability of Food