Despite the massive size of the U.S. food marketing system, we have seen its relative importance in the entire U.S. economy become smaller over past decades in terms of contribution to GDP and employment as the rest of the economy grows. What economic factors have led to a relatively large increase in consumer food expenditures over the past several decades? What is the marketing bill?

Recall that food products add "value" as they move along the marketing chain, with the farm value only accounting for around 16 cents of the aggregate retail food dollar, with the farm value being much lower for food consumed away-from-home vs in-home. Due to technological advancements and marketing efficiencies in the food and farm sectors, Americans today spend less than 10% of their disposable incomes on food - much lower than most of the rest of the world. What is the Engel curve? Be able to display this graphically.

Does the declining farm value as percent of consumer food expenditures over the past several decades by itself provide proof that farmer's economic well-being (i.e. profitability) has declined considerably or that food manufacturers, processors, and retailers are abusing their market powers at the expense of the farmer? Why or Why not?

Review some of the demographic trends among U.S. agricultural producers and food consumers and list them.

What do producers (farmers), agri/food businesses, and consumers want from our food marketing system? Recall some of the economic issues surrounding the surrounding conventional mass food production vs local/small/sustainable food production, organic, GMO-free, and the antibiotic-free debate. Read the article "Consumers are Always Right (even when they are wrong) article in the class notes and be able to understand the concept "consumer sovereignty" and how it relates to the current food debate on GMOs, organics, plant-based alternatives, antibiotics, animal welfare, etc.

Recall that an index is a unitless summary statistic that allows one to compare changes in a given variable over a given time period. What three basic items are needed to calculate an index? What are price relatives and how does one compute/interpret price relatives and index numbers? Recall the issues/concerns surrounding weighting the components of an index and adjusting data for the rate of inflation.

Identify and discuss three different ways economists use the Consumer Price Index (CPI). What are the major components of the CPI? Recall that US inflation has been relatively tame during your lifetime ... until recent events.

What is the difference between nominal and real prices (or nominal and real income)? Recall that changes in real prices or income are adjusted for the rate of inflation and thus provides an indicator of the change in producer's/consumer's purchasing power.

What has been the general trend in U.S. and global food and farm prices in recent years? Be able to identify and discuss some of the economic factors that have affected these trends.

Recall that farm commodity prices are generally more volatile than consumer retail food prices. Why? Likewise, grocery store prices tend to be more volatile than restaurant prices. Why? Do global food prices tend to be more or less volatile than U.S. food prices? Identify some potential reasons for this occurrence.

How does overall inflation impact farmers?

Has the price differential between organic and conventional (non-organic) foods increased over time due to increased demand for organic foods? Identify some economic factors that have affected the price differential between organic and conventionally produced food items over the past decade. What economic factors impact farm to wholesale/retail food price spreads and consequently the farm value of the retail food dollar?

Recall that "consumption" (or disappearance) is measured as a residual using the supply/use identity. Remember what comprises "supply" and what comprises "use."

How much food production is typically not consumed? Identify some reasons (both on and off the farm) that causes food not to reach the consumer's table.