Methods for Measuring Food Affordability: The Local Perspective
In an earlier blog post, Colt Jensen stated, “Definitions are not just academic. They shape who gets served, what gets funded, and how success is measured.” That post explored how understanding specific contexts and definitions of being a “rural place” is critical for community and economic development officials’ work across North Carolina. The post’s emphasis on measurement is particularly important in our current situation of continuing stress on household budgets. A post in April presented data from a variety of studies indicating households are struggling with affordability across sectors such as housing, food, water, transportation — even farm-based fuel.
Unfortunately, six months later, households are still struggling. Affordability concerns not only remain but are drawing increased attention in the face of across-the-board higher-than-expected inflation, according to a Bureau of Labor Statistics report released last week. Two different ways affordability is measured in the case of food is presented below, as well as what local governments may wish to consider when they try to apply the broad statistical data featured in national headlines to their own communities.
Measuring Affordability of Food with the Food Budget Ratio
News reporters may simply look at higher prices for tomatoes or beef at the grocery store as a barometer for inflation, using grocery prices as a proxy for economic pressures. Many examples of such news stories on rising prices exist. However, affordability measures do not just consider the higher prices of the goods themselves, but whether or not available household resources – usually money — is increasing at a similar pace. For example, if wages are increasing faster than prices are rising, then the higher prices themselves would not necessarily be a concern.
One measurement approach for affordability of food is the Food Budget Ratio, proposed in 2024 by researchers Jennifer Guan and Jeremy C-H Wang, which tries to capture the impact of food spending on the overall household budget.
Food Budget Ratio=Total Cost of Food for the Year/Total Household Income After Taxes
There are two important considerations to using this ratio, whether in one’s own home or by a local government seeking to understand the extent of stress on household budgets in its community. First, the formula does not require literally tracking all food purchases over a year – an analyst could track typical purchases over a week for a limited but varied, randomly selected group of households. The analyst could then multiply that value by 12 months to understand the overall yearly amount of spending.
Second, in the equation, we need to consider total household income after taxes. Taking the amount of money needed for taxes out of the equation allows families to focus on truly available funds, not simply total income coming into the household. If food prices rise, with no similar increase in accessible funds, food takes a bigger piece of the available ‘pie’ so to speak, and overall affordability of food gets worse. A resulting value of .10 or 10%, would indicate a household was spending 10% of available household funds. A value of .25, or 25% would suggest a quarter of all available funding was going to food, a much less affordable situation.
Measuring Affordability with the USDA Thrifty Food Plan
One might be tempted to consider looking at data with information available from another Economic Research Service source: the USDA Thrifty Food Plan (TFP). This national measure does not track affordability based at the community level or in comparison with a household’s resources per se. Instead, it more directly focuses on the people in the household (number, age, etc.) and what it would cost in general to provide them a nutritious, practical diet using a standardized market basket of goods. It is also the basis for setting Supplemental Nutrition Assistance Program (SNAP) benefits for households nationally.
The information provided by the Thrifty Food Plan is just part of the picture. It gives a very broad idea of how much a nutritious meal might cost on average, nationally. It is not adjusted by state or locality. However, it is only when households understand the local situation of food availability and price and considers how much money the household has available to spend, can the family determine if that general meal is ‘affordable’ for them.
A key consideration for local governments, therefore, is how they might incorporate local needs and resources to track affordability not as a national or state-wide measure, but at the community level. This allows for bringing into the conversation local variation of quality, quantity, availability, necessity and prices of local foods, goods that must be shipped in, and different population preferences.
Monthly USDA Thrifty Food Plans can be found here, and the fuller range of measurement tools around food costs and inflation can be found through the US Department of Agriculture’s Economic Research Service.
