Food often travels long distances from the farms that produce its raw ingredients to the plate from which we eat. This agrifood value chain plays an important role in global employment. Credit: Foodio|Dreamstime.com.
When we order our favorite restaurant food through Uber Eats or DoorDash, we may not think of those drivers as part of the global food system. But their jobs exist because food can travel long distances from its source ingredients to our plate, along a farm-to-fork “value chain” between producers and consumers.
In other words, what we eat is not just the result of agricultural labor but of manufacturing and service sectors that add post-harvest value to our food. The movement of workers within these food-related industries is strongly driven by changes in consumer demand, plays a key role in a country’s economic growth and even points to new reasons for the gender pay gap.
These findings emerged from a study of 189 countries over the course of 29 years led by AAE Faculty Associate Jing Yi and a team of collaborators that was recently published in Nature Food.
“Our analysis of more than 80 billion observations showed that nearly half of the world’s population works in the global food system, including everything from from primary production—agriculture, forestry and fishing—to processing plants, grocery stores and restaurants,” says Yi.
The decline of traditional farm jobs, adds Yi, has long dominated the “structural transformation” narrative: It explains economic growth with labor moving from agriculture into higher-productivity manufacturing and service sectors, largely because agricultural technology boosts farm yield and profitability.
“We found that workers actually don’t exit the food system but migrate from upstream production to one of five midstream and downstream sectors,” says Yi. “That’s why overall employment in the food industry has changed remarkably little during the past three decades.”
The three post-farmgate midstream sectors include food transportation, wholesale trade, and food and beverage processing: turning potatoes into chips, milk into cheese or grapes into wine. The two downstream sectors include retail trade and food service in hotels and restaurants. As countries become wealthier, more people consume food away from home, increasing the demand for food service workers. That service sector is more labor-intensive but offers lower wages than primary production and midstream industries; this is true at all levels of per-capita gross national income.
One of the study’s main findings is that these changing dietary preferences, which lengthen the food value chain and pull workers off the farm, are driving global job changes more than technological improvements push workers out of primary production. In other words, employment is more strongly affected by demand- than supply-side forces.
The fact that consumers in wealthier countries buy more prepared food and dine out more frequently also has a striking impact on the gender pay gap: Men are more likely to move into the better-paying manufacturing and transport sectors while women are more likely to move into the low-wage retail and service sectors. These differences in labor migration mean that the ratio of women’s to men’s average earnings is 7% lower in high-income than low-income countries.
The study did not identify specific reasons for this gender pay gap, but they are likely complex and diverse. “In high-income countries, women may be more willing than men to accept lower retail and service sector salaries if those jobs provide greater flexibility for family care,” says Yi. “Women in low-income countries, on the other hand, may have less access than men to capital or to educational opportunities required for midstream jobs.”
The team’s previous study found that post-farmgate value addition accounts for more than 70% of the “global food dollar.” Thus, farmers receive less than 30% of consumer expenditures. According to the new analysis, the labor share of that value addition value grows by 3.6% for each doubling in per-capita national income. That includes not only labor in the midstream and downstream sectors but also various support industries: producers and distributors of seeds, water and energy, for example, and companies providing legal and financial services to food industries.
The study’s separate estimation of domestic and export-oriented value addition provides opportunities for follow-up analyses. For example, studying how exports of raw agricultural products vs. processed food affect growth trajectories of low-income countries can inform poverty reduction efforts. Designing policies that help lower the gender gap will be another important goal of future research, says Yi.
The study confirms that food policy is much more than farm policy. For example, hallmarks of economic development include not only textile mills and smartphone assembly lines but also wineries and modern supermarkets. Rural electricity boosts farm productivity by powering irrigation and harvesting equipment—but it also powers a small business owner’s coffee pulper that converts raw cherry fruits into roasted beans for sale.
“The traditional structural transformation narrative has focused on the role of non-agricultural manufacturing sectors in economic development,” says Yi. “Our analysis, which covers 99% of the global economy, highlights the post-farmgate segments of the agrifood value chain as key elements of structural transformation because they are strong drivers of job growth and national wealth.”