S - Working Parents Outsource Children’s Meals

D I E T A N D H E A LT H

F I N D I N G S

VO L U M E 7  I S S U E 1

Consumers Willing To Pay a
Premium for Organic Produce

A M B E R WAV E S

4

Consumers are buying organic food despite its generally
higher price tag. Retail sales of organic food increased from $3.6
billion in 1997 to $18.9 billion in 2007, accounting for over 3
percent of total U.S. food sales. According to the Nutrition
Business Journal, organic food sales could reach an estimated
$24 billion in 2010. Among the organic food categories, fruit and
vegetable sales were the largest ($6.9 billion), almost 37 percent
of organic sales in 2007.
ERS researchers estimated price premiums for 10 popular fresh
organic fruit and vegetables. These price premiums reflect consumers’ willingness to pay for attributes and additional production
costs associated with organic foods, such as organic certification and
the lack of pesticides during production.

Organic price premiums vary among fresh produce

Potatoes

Price
premium (%)
62.2

Organic share
of sales (%)
0.8

Shutterstock

percent for oranges to 40 percent for strawberries. For vegetables,
organic premiums varied from about 17 percent for tomatoes and carrots to 62 percent for potatoes.
Premiums reflect both consumer demand and available organic
supply. Increased demand or tight supplies drive up price premiums,
which, in turn, can translate into lower sales relative to the nonorganic commodity, and this is true for some of the produce items
examined. For example, potatoes commanded the highest organic
price premiums and also accounted for a low share of total fresh potato sales (less than 1 percent). Similarly, carrots had one of the lowest
organic premiums and a high organic share of the carrot market (11
percent). For other fruit and vegetables, such as onions and apples,
this relationship is not as strong, inferring that many factors affect
the magnitude of organic price premiums and market share.

Grapes

35.1

1.2

Strawberries

40.3

1.6

Onions

23.0

1.7

Peppers

36.7

1.8

Travis A. Smith, tsmith@ers.usda.gov

Bananas

27.5

2.3

Biing-Hwan Lin, blin@ers.usda.gov

Oranges

22.0

2.3

This finding is drawn from . . .

Tomatoes

16.6

3.2

Apples

31.8

3.3

Carrots

17.2

11.1

“Organic Premiums of U.S. Fresh Produce,” by Biing-Hwan Lin, Travis A.
Smith, and Chung L. Huang, in Renewable Agriculture and Food Systems,
23(3): 208-216, 2008.

Note: Organic produce are identified by the presence of the USDA organic seal
or organic-claim codes created by Nielsen.
Source: Calculated by USDA, Economic Research Service using Nielsen
Homescan Consumer Panel data, 2006.

Traditionally, organic premiums have been calculated using surveys that ask consumers how much more they would pay for organic
foods over conventional foods. The ERS study, however, used actual
consumer purchase data to estimate a pricing model that accounts for
various product attributes, market factors, and consumer sociodemographics. Data were obtained from Nielsen, a market research firm
that recruits a panel of households to record their food purchases
from grocery stores and other retail outlets.
The research found that organic fresh fruit commanded a significant price premium, varying from 13 cents per pound for bananas in
2006 to 88 cents per pound for strawberries. The per pound premium
for fresh vegetables ranged from 19 cents for onions and carrots to 54
cents for peppers. Organic price premiums converged in the range of
13-36 cents per pound for 7 of the 10 fresh produce items considered
in the study. For fruit, the estimated organic premiums varied from 22

Higher Food Prices Can Take a
Bite Out of SNAP Benefits
Rising prices can erode the purchasing power of benefits provided
through government assistance programs. To help protect program participants from the effects of higher prices, many government benefits,
including those from the Supplemental Nutrition Assistance Program
(SNAP, formerly the Food Stamp Program), are adjusted annually for
inflation. In periods of steeply rising food prices, however, the timing
of annual adjustments may result in periods of the year when SNAP
benefits are inadequate for purchasing the nutritious diet designed by
USDA as the basis for benefits.
SNAP is designed to provide low-income families with increased
purchasing power to obtain foods that make up a low-cost, nutritionally adequate diet. The maximum monthly SNAP benefit amounts are
based on the cost of the Thrifty Food Plan—a market basket of foods
which, if prepared at home, would provide a complete, nutritious
diet at minimal cost. Households with no or minimal incomes receive
the maximum benefit amount. Benefits are less for higher income
eligible households, and these households are expected to spend
some of their own money on food.

D I E T A N D H E A LT H

F I N D I N G S

Working Parents
Outsource Children’s
Meals
Virtually all households take the dollar cost of
food into account when making food choices. But for
some households, the time involved in planning,
shopping for, and preparing a meal is also an important consideration. Findings from the Eating & Health
Module of the American Time Use Survey (ATUS)
indicate that many working parents free up time by
“outsourcing” their children’s meals—that is, they purchase
prepared meals for their children at school or day care.
In 2007, principal meal preparers in households with individuals
younger than age 19 were asked whether any of the children or youths
ate a breakfast and/or lunch prepared at a school, a paid day care or
Head Start center, or a summer day program in the week before the

Time spent
in paid work,
minutes
per day

Meals outsourced

303

279

347

Household income
below 130 percent
of poverty

304

270

Household income
above 130 percent
of poverty

Notes: Data include civilian population age 19 or over. 130 percent of poverty is the
gross income limit to qualify for free school meals.
Source: Calculated by USDA, Economic Research Service using data from Bureau of
Labor Statistics' 2007 ATUS and ERS 2007 Eating & Health Module.

SNAP benefits are adjusted annually in
October (the beginning of the fiscal year), based on
the 12-month food price change measured in June.
SNAP benefits lag food price changes. If food prices
increase, program participants may experience a
shortfall in benefits even at the start of the new
fiscal year: the benefit adjustment that takes effect
on October 1 does not account for nearly 4 months
of price changes (mid-June to the end of
September). And, since the adjustment is made
only once a year, nearly 16 months of food cost
changes occur before the next benefit adjustment.
Prices for the Thrifty Food Plan basket rose
9.3 percent between October 2007 and September
2008. ERS researchers estimate that the shortfall
in the caseload-weighted maximum benefit for
the program grew from $7 per household in
October 2006 to $19 in September 2007. And the
shortfall grew from almost $8 in October 2007 to
$38 by September 2008. In an average month,
SNAP households faced shortfalls of $12 in FY

Joanne F. Guthrie, jguthrie@ers.usda.gov
Ket McClelland, ksdolan@ers.usda.gov
This finding is drawn from . . .
ERS Eating & Health Module of the American Time Use Survey (ATUS),
available at: www.ers.usda.gov/data/atus/

2007 and $22 in FY 2008, representing losses in
food purchasing power of 4 percent and 7 percent,
respectively, of the maximum household benefit.
Alternative adjustment methods can reduce
the shortfall but will raise program costs. ERS estimates that adjusting benefits semiannually would
have reduced the loss in food purchasing power
for the maximum benefit by 20 percent in 2007
and 26 percent in 2008. Implementation of this
alternative would have increased benefits by $330
million in 2007 and $789 million in 2008.
Kenneth Hanson, khanson@ers.usda.gov
Margaret Andrews, mandrews@ers.usda.gov
This finding is drawn from. . .

Rising Food Prices Take a Bite Out of Food Stamp
Benefits, by Kenneth Hanson and Margaret
Andrews, EIB-41, USDA, Economic Research Service,
December 2008, available at: www.ers.usda.gov/
publications/eib41/

Shutterstock

5
A M B E R WAV E S

All

295

Meals not outsourced

MARCH 2009

For most households with children and an employed principal
meal preparer, more time at work corresponds with greater
outsourcing of children's meals

survey interview day. Having their
children eat meals prepared at school
or day care can save households time
otherwise spent preparing and packing meals at home. Time savings may
be valuable to households with principal meal preparers employed in paid
work, especially the more hours they
work. ATUS data indicate that
Ken Hammond, USDA
employed meal preparers who took
advantage of prepared meals at school or day care spent more time in
paid work (303 minutes per day, or 5 hours) than those who did not
(279 minutes, or 4.6 hours).
This result held across most income levels, except for households at the lowest income level. Among households with incomes
qualifying them for free meals, employed people who prepared
meals and who did not obtain meals for their children from school or
day care worked longer hours (347 minutes, or 5.8 hours) than those
whose did obtain meals (295 minutes, or 4.9 hours). The reverse was
true for higher income groups.
Why are low-income families who work more hours less likely to
obtain school or day care meals for their children? One possibility is
that the low-income households in the survey were more likely to have
children ages 5 and younger. Preschoolers are the least likely to eat outsourced meals because participation in day care centers that provide
meals is not as universal as school attendance.