The Food and Beverage Boom

September 11, 2012

The U.S. food and beverage industry should be proud.

This week, the U.S. Department of Labor announced that they added 4,800 food manufacturing jobs in August, as well as an additional 4,200 related jobs in food and beverage stores, 28,300 in food and drinking establishments, and 28,000 in accommodation and food services, making them a “critical driver” in domestic job growth.

How critical? For those of you keeping score, that’s two-thirds of the 96,000 total jobs added to the U.S. economy in the month of August.

Now, you’ve heard us talk about the disconnect between the food industry and the farming industry–usually when we’re referring to the difference between what you pay for a loaf of bread at the grocery story and what the food manufacturer paid for the ingredients or “commodities” needed to make it.

There is a misunderstanding that these two industries are intrinsically linked, and when food prices are high, it is because commodity prices are high–giving many people the idea that U.S. farmers and ranchers are getting rich at the expense of the American taxpayer.

It’s true that modern agriculture is a volatile business, subject to the whims of Mother Nature, an unpredictable global market and soaring input costs, and these conditions sometimes result in rising commodity prices. But they result in lower commodity prices just as often, and when the commodity prices decrease, food prices rarely do.

In fact, the commodity price has very little to do with the cost of the finished product, which is why when food manufacturers claim that the food grown by U.S. farmers is too expensive and prohibits them from sustaining a profitable and growing business, you’ve also heard us call their bluff.

Most recently, the U.S. sugar program came under attack when a group of candy companies known as the Coalition for Sugar Reform, claimed that the no-cost program was costing thousands of American jobs each year.

However, U.S. Census data shows that since sugar policy took hold in 2008, production of candy in the United States has increased 2.5 percent, an increase which is reflected in the industry’s high profit margin, record sales, recession resistance, and recent growth.

These latest numbers prove it: the U.S. agricultural system is serving our food and beverage manufacturers just fine—helping to add a total of 96,000 jobs at a time when most other U.S. manufacturing industries are in decline. We can think of worse ways to lose an argument.