what piece of the pie - north carolina department of ... bar graph, profits, depreciation, farm...

WhatPiece ofthe Pie?

✔ LEVEL: Grades 4-12

SUBJECTS: Mathematics, Social Studies,

(Economics), Consumer Education, Family

and Consumer Science, Business Education,

Social Studies

SKILLS: Analyzing; brainstorming; collaborating; comparing

similarities and differences; comprehending; creating,

reading, and interpreting charts and graphs; developing

vocabulary; discussing; estimating; explaining; following

directions; predicting; reasoning; recording; synthesizing;

understanding cause and effect; using numbers

BRIEF DESCRIPTIONStudents explore theeconomics of con-sumer food productsby analyzing whogets what portion ofthe price we pay forour food.

OBJECTIVESThe student will:- predict and com-

pare the expensesof retailing a foodproduct;

- create, read, andinterpret piecharts and bargraphs; and

- given the rangefor each expense,compute theaverage.

ESTIMATEDTEACHING TIMEThree Sessions:45 to 60 minuteseach.

MATERIALSColored pencils in sets of 13 colors or acombination of markers and pencilswhich have 13 colors; a set of coloredtransparency pens; transparencies of theattached What Piece of the Pie? andClass Dollar Predictions sheets;and photocopies of the attached ClassDollar Predictions, What Part ofa Dollar?, Piece of the Pie in2000, and Farm Costs sheets.Optional: crayons, calculators,Accurate Food Dollar,Divided FoodDollar, FoodDollar.

VOCABULARYadvertising, bargraph, profits,depreciation, farmvalue, transportation,labor, packaging, piechart, product damage,mean, median, mode

RELATED LESSONSFrom Sea to Shining SeaFrom Fiber to FashionStep by StepTomatoes to Ketchup, Chickens to Omelettes

SUPPORTING INFORMATIONAs consumers in an economy thatproduces a bountiful supply of foods andmany other agricultural products,Americans give little thought to themillions of workers involved in thesystem that produces that bounty. Muchlike the story of the Little Red Hen weenjoy ready-to-eat foods without contrib-uting a great deal of work to the process.In addition, consumers in the United

States are spending less of their dispos-able income for food than any othercountry in the world. According to theEconomic Research Service (ERS) of theUnited States Department of Agriculture(USDA), consumers spent only 10.4percent of their disposable income forfood in 2000; thereby having moremoney left over to spend on other things.

While we often hear that less than 2percent of the U.S. population producesfood, this statistic from the United States

Department of Agriculture (USDA)is somewhat misleading. Less

than 2 percent of the U.S.population is involvedwith growing crops andraising animals on U.S.farms or in otherproduction facilities suchas greenhouses orfeedlots. However,approximately 17 percentof the U.S. population is

involved in the total food and fibersystem. This involves producing a rawproduct; processing that product into aconsumable food, beverage or item ofclothing; marketing that product; trans-porting of raw materials and finishedproducts; and retailing those products.Also included in this listing should bethose that provide research and develop-ment to the food and fiber system;education and dissemination of informa-tion; other types of communication; andthose that supply inputs and services,e.g. machinery, fertilizer, managementadvice, financing, etc.

Millions of workers and billions of dollarsmove food products from the land to ourgrocery stores and onto our dining tables.

487 ©2003 Project Food, Land & People

©2003 Project Food, Land & People

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The cost includes producing, processing, packaging,advertising, and distributing the food product. As rawmaterials are changed into forms we can eat and use,they pass through a production cycle. This cycle occursfor all food whether it is a salad, burger or bread. Someof the steps involved may have been breeding, growing,feeding, planting, harvesting, baking, freezing, canning,bottling, packaging, advertising, shipping, warehousing,and more. Production, processing and distribution taketime, use energy and equipment, and provide jobs formillions of workers. Each of those workers needs toearn a living to buy a home or pay rent, buy a vehicle,buy their own food and clothing, educate their children,save for retirement, etc. Everybody gets a “piece of thepie,” a portion of the money that makes up the cost offood.

Economic QuestionsThere are five basic economic questions that deal withthe production of any goods. Whether the farmer,processor or consumer, anyone involved in any aspectof the process that takes goods from the field to theconsumer, needs to ask these questions:

1. What and how much should be produced?

There are key decisions to be made in anyeconomy or business, which may spell its successor failure. Resources are limited and so is thepotential market base. Each decision is a trade-off.If the land is used to grow corn, a producer doesnot grow soybeans on it at the same time. Abusiness cannot exceed the capability of its laborforce, available natural resources, or capital.

At the same time, a business needs to speculateabout its potential market. Will exports for corn bestrong and help bolster prices? Will other growersplant more or less corn? Will automobile salesremain strong or will consumers want to buy sportsutility vehicles? After deciding what to produce, thebusiness must decide how much of each itemshould be produced.

2. How should goods and services be produced?

At every stage, from buying the seeds to gettingthe goods to the consumer, decisions must bemade about how to get the job done for the leastcost, be compatible with good stewardship of theland, and make efficient use of water resources.

3. Who should produce what and who should benefitfrom that productivity?

Within each economic system, different people dodifferent jobs, businesses sell or provide differentservices, people and businesses specialize. Whodecides which people or companies will producewhich goods and services? This question relates tocareer and business choices. Will a person becomean auto mechanic, teacher, musician, veterinarian,or choose some other career? Will a business sellsoftware, produce milk, grow geraniums, orproduce advertisements? Between economies,there is specialization as well. Some countries havea competitive advantage due to their resource base,climate, labor force, technologies, or marketaccess.

There are many factors that determine thedistribution of income within an economic system.For instance, some of the money will go towardpayment for work. Highly trained or skilled labor isvalued more than low skilled or labor that requireslittle training. Demand also affects the amount paidto labor. During times when the economy is slowand unemployment high, labor is more available (ingreater supply than demand) and wages tend to belower than when the economy is thriving. Ifunemployment is low (in greater demand thansupply), then wages tend to be higher. Whether ornot labor is organized also influences wages insome cases as well as other factors in incomedistribution. Each business makes its own decisionsabout wages, with government setting a minimumwage for all workers.

Other funds will pay for benefits such as healthcare, retirement pensions, paid vacations, stockoptions, etc. Benefits are used to entice and retainlabor needed for a particular industry in the sameway as good wages. Each business makes its owndecisions about the benefits it will offer itsemployees.

The share received by the government for socialprograms, defense, operating the treasury,entitlements, building roads, etc., is the tax rate.Each country’s form of government determines itsown tax rate and the services it provides.

Employee benefits vary widely between businesses,within sectors of a single, national economy andbetween national economies. What should beproduced and who benefits from it determinewhere goods will be produced in the globaleconomy.


4. How should resourcesbe used or conserved?Should we invest inresearch andtechnology?

With a limitedresource base, theuse of resources is akey economicquestion. Resources need to be usedwisely from both a near-term and long-term perspective. Human history seemsto indicate that invention shores up alimited resource base or averts a loomingresource crisis. The development of thekerosene lantern averted the whale oil crisis at theturn of the 20th century as whales were beinghunted to extinction. Norman Borlaug’sdevelopment of short-stem hybrid wheat initiatedthe “Green Revolution” and averted the loomingfood crisis forecast by Thomas Malthus.

5. Can we change as technology evolves and themarket demands shift?

Consumer demands change and new technology isconstantly being developed. If a business oreconomy cannot adapt to ever changing businessclimates, it will be replaced by those that can. In aglobal economy, the businesses that have thecompetitive advantage or meet consumer needsbest, will be the survivors. The same will be true foragriculture.

Factors That Influence Food PricesBeyond the basic questions answered when planning toproduce any given product, the food and fiber systemmust deal with five specific areas that influence foodand other agricultural prices. These are supply anddemand, natural disasters, perishability of the product,processing and storage costs, and the cost to produce aproduct.

Supply and Demand: If consumer demand for afood is greater than the supply, the price will increase.If supply is greater than demand, the price will de-crease. The available supply may vary widely through-out the year. For example, the supply of many cropsreaches a peak at certain times of the year. Whensupplies are readily available, demand may not keep upwith supply, so prices are lower. Foods in limitedsupply have high prices because demand for limited orscarce items means people will pay more to get them.Since weather has such a significant impact on agricul-ture, the supply may vary widely from one locale to

another, season to season, or year to year. Thedemand for a given commodity may be influ-enced by media attention to recent nutritionalresearch, advertising, medical breakthroughs,trends, and/or fads.

Natural Disasters: Severe weather, earth-quakes, floods, and droughts affect food

prices. Freezing temperatures inCalifornia or Florida can damage

orange trees, reducing the supply for aseason or even years. Again, demand for ascarce supply increases prices. Whenweather-related disasters such as hurricanes,

floods, and early or late freezes destroy veg-etable crops, vegetable supplies decrease and prices

increase. A freeze that hits the coffee crop in SouthAmerica can change the face of coffee prices acrossthe globe.

Perishability of the Product: Many foods areperishable products. Cucumbers, for example, have avery short shelf life. Of all the cucumbers that leave thefarm, perhaps a third or less will be sold to consumers.When shipments are damaged in transport or whencareless consumers damage food while shopping, thestore manager may have to discard those damageditems. Because the store paid for items it cannot sell,such losses are added to the food prices.

Processing and Storage Costs: Food processingmay include canning, freezing, curing, drying,freeze-drying, baking, or culturing. Some of theseprocesses destroy or slow the growth of harmfulmicroorganisms and are used to preserve the nutrientsor quality of foods until we eat them. Other processingprovides ready-made food for consumers. In the1800s, a farmer took the wheat to the mill one sack ata time to be ground into flour, carted it home, andbaked bread. Today, consumers purchase a sliced loafof bread in a plastic wrapper or perhaps a sandwichmade-to-order as they wait.

Refrigeration and controlled atmospheric storage keepfoods fresh by delaying the growth of microbes andslowing the ripening and gradual deterioration of freshfoods. During controlled atmospheric storage, food isheld in a cold area enriched with carbon dioxide. Thisprocess helps extend the shelf life of some foods,especially fruits and vegetables.

Expenses: The USDA divides the expense of foodinto two segments, the cost to purchase raw commodi-ties from farms and the cost to transform those com-modities into finished consumer products. The USDAcalls the second group of expenses “marketing ser-


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language), additional transportation, and advertisingand promotion in various languages.

There are 12 categories for marketing services: labor,packaging, transportation, depreciation, advertising,energy, profits, rent, interest, repairs, business taxes,and other costs. These items are operating expensesfor processors, distributors and retailers. Farmers alsohave many of these same expenses, but they are notincluded in the categories already discussed. Due tolarge differences in producing agricultural products, it isdifficult for the USDA to assign a single figure to thesame expense categories as farm costs to producethose goods. Therefore, for ease in reporting, theUSDA assigns a “farm value” to the agriculturalproduct based on market prices. Any expensesincurred by the farmer also are included in that sum.This figure does not represent farm profit! This will beexamined later in one of the activities of this lesson.

The following explanations of marketing services willbe helpful to your students.

Labor: Includes payroll, wage supplements, andbenefits earned by food marketing workers such asassemblers, manufacturers, wholesalers, retailers, andrestaurant employees. Labor is the greatest cost,accounting for almost 40 percent in the food marketingbill. Payroll accounted for 88 percent of those laborcosts in 2000. The remaining 12 percent primarilyconsisted of employer social security and unemploy-ment taxes, pension payments, insurance for employ-ees, and wage supplements (tips or bonuses). Labor isthe largest portion of the total food cost (see theattached Piece of the Pie in 2000).

Packaging: Includes the costs of paper, plastic, glass,cardboard, or other materials used to cover, wrap, seal,or contain a raw or processed food product. This is thethird largest cost in total food cost and second inmarketing costs.

Transportation: Includes the cost to move foodamong processors, distributors, and retailers. All of thetransportation costs that occur after commodities leavethe farm are included here.

Depreciation: The decrease in the price or value of aparticular item over time is known as depreciation. In asense, depreciation is the loss of value as an item wearsout or becomes obsolete. Generally, depreciation isrelated to machinery and equipment, but it also coverstechnology, which becomes obsolete.

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vices.” Everyone involved in the production of food hasexpenses. The payment farmers receive for their rawproduct is called farm value. This was 19 percent of the$661.1 billion consumers spent in 2000 for foodsgrown on U.S. farms. In 2000, farm value or grossreturn paid to farmers was $125.6 billion. (See theattached Piece of the Pie in 2000.) Farmers mustpay all of their expenses out of that payment, includinglabor, taxes, loans, interest, rent, seeds, utilities, andother costs. (See the attached Farm Costs sheet.)

According to the National Agricultural Statistics Service(NASS), during 2000 the average U.S. farm spent 13percent for animal feed, over 10 percent for labor, 8.5percent for rent, almost 14 percent for fertilizers, lime,and crop-protecting chemicals, when combined, almost10 percent for livestock and poultry; and almost 4percent each for seed and plants, farm machinery, andproperty taxes. Add to that the cost for farm servicessuch as veterinarian care, interest on loans, fuel, farmsupplies and repairs, farm improvements and construc-tion, and the purchase of a truck or other farm ve-hicles, and it becomes apparent that the profit marginis very small. In addition, when farmers or ranchers goto market with their products, it is a very rare occasionthat they are able to negotiate the price for theircommodity.

Marketing services include the expenses associated withtransporting, processing and distributing foods thatoriginate on U.S. farms. In 2000, that represented 81percent ($537.8 billion) of food expenditures. Con-sumer expenditures rose $211.3 billion from 1990 to2000. The rising costs of labor, transportation, packag-ing materials, and other inputs used in marketing areprimarily responsible for the considerable increase inthe cost of marketing foods grown on U.S. farms. Ifgoods are to be exported, additional expenses may beadded. Those costs include additional market researchto determine appropriate markets, reformulatingproduct to meet market demands, providing a specialpackage for a certain market (including its appropriate


Advertising: The use of commercial communicationsuch as newspapers, magazines, billboards, radio, ortelevision to encourage someone to purchase a particu-lar item by emphasizing its desirable qualities. A smallamount of the total food cost is used for advertising.

Energy: Includes resources such as water, oil, gaso-line, natural gas, and solar, wind, and thermal energy,which are used to provide heating, cooling, lighting,and power to assist in processing, storage and market-ing products. Fuels for transportation are not includedhere, but appear under transportation.

Profits: Income in goods or money after deduction ofexpenses, but before payment of taxes to government.The USDA lists profits in this way to represent thateach business involved in the marketing process (as wellas those in the production end) must exceed the cost ofexpenses to remain in operation.

Rent: An agreed-upon amount of money paid to theowner at fixed intervals for the use of land, equipment,or buildings. Any item that is used on a lease isincluded.

Interest: A fee paid for borrowed money.

Repairs: Any costs incurred to restore equipment,machinery or buildings, which are torn, damaged orbroken. It also includes routine maintenance such aschanging oil, painting buildings, or replacing parts forsanitary reasons to insure food safety.

Business taxes: Includes payments to local, state andfederal governments for property, state, unemploymentinsurance, and social security taxes (FICA). Federalincome tax is not included.

Other costs: Includes property taxes and insurance,accounting and professional services, promotion, baddebts, and many miscellaneous items.

NOTE: The Economic Research Service and NationalAgricultural Statistics Service of the USDA collectedinformation used in this lesson in the year 2000.

GETTING STARTEDA set of colored transparency pens, one colored-pencilset of 13 colors (or a combination of markers andcolored pencils, with 13 colors) per group of three orfour students, transparencies of the What Piece ofthe Pie? and Class Dollar Predictions sheets,and one photocopy per group of the Class DollarPredictions, What Part of a Dollar?, Piece ofthe Pie in 2000 and Farm Costs sheets, and twophotocopies per group of the What Piece of the

Pie? sheet. (Note: Decide if you or your students willdetermine the colors for each expense category to beused in Session One, Step 5.)

PROCEDURE

SESSION ONE1. Introduce the lesson by asking:

- How many of you shop at the grocery store withyour parents? By yourselves? With friends?

- Why does the cost of some food items changefrom one month to the next or from one seasonto another?

- What kinds of expenses do you think go into thefoods you see in the grocery store? Havestudents brainstorm a list of expenses. Write thelist in a visible place. (Possible answers includeprocessing, transporting, packaging, packing,advertising, paying for utilities and labor, andmore.)

2. Explain to students that everyone involved in theproduction of food has expenses. Tell them theexpenses are grouped by the USDA into 13categories: farm value, labor, packaging,transportation, depreciation, advertising, energy,profits, rent, interest, repairs, business taxes, andother costs. Explain that for every dollar spent onfood at the grocery store, a certain amount orpercentage of that dollar goes to each of the 13categories.

3. Divide the class into groups of three or fourstudents, but no more than 10 groups. Assign eachgroup a number. Distribute the Class DollarPredictions sheet to each group. Go over eachof the categories, making sure that studentsunderstand the meaning of each one. (SeeSupporting Information.)

4. Each group works with the Class DollarPredictions sheet to predict what part of a dollar(the number of pennies) or what percentage goesto each of the categories. Tell students to add theiramounts as they complete each category to makesure their total adds to $1 (or 100 percent). Eachgroup records its predictions for each categoryunder the column for its group number. Each groupshould be prepared to explain its predictions. Havestudents star their top three predictions.

5. Distribute a colored-pencil set of 13 colors ormarker/pencil combination or 13 differentlycolored crayons to each group for the students to


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color pennies and pie charts. If you did notpredetermine the colors to use, the class needs toagree on what color to use for each category. Forexample, farm value is green, labor is blue,packaging is brown, and so on. Tell students thatall groups must use the agreed on colorassignments throughout the lesson. This isimportant for students to be able to makecomparisons.

6. Distribute the What Part of a Dollar? (stacks ofpennies) and What Piece of the Pie? (pie chart)sheets to each group. Within each group have twostudents work with the What Part of a Dollar?sheet and the remaining students work with theWhat Piece of the Pie? sheet. Studentscomplete their stack of pennies or the pie chartusing their group’s Class Dollar Predictionssheet.

Explain to students working with the What Partof a Dollar? sheet that each stack of pennies isdivided in half lengthwise. The left side of the stackof pennies represents their group’s predictions; theright side will be used in Session Two. In eachcategory, students shade in the number of penniesto match their group’s prediction.

Use the transparency to explain to studentsworking with the What Piece of the Pie? sheetthat each pie-shaped wedge represents twopennies (or 2 percent). To determine how manypie-shaped wedges to color in, students divide theirprediction by two. For example, if studentspredicted that farm value was 10 pennies (or 10percent), 10 divided by two is five. Students colorfive wedges on the pie chart. Have them color inthe pie chart as well as the boxes in the Pie ChartLegend. Tell students to begin coloring where theysee the word “START” on the top of the pie chartand to color clockwise. They begin with FarmValue and continue completing the pie chart in thesame order as the categories are listed on theClass Dollar Predictions sheet.

For younger studentsUse the predictions from one group. Begin byhaving each group color in the Pie Chart Legendon their What Piece of the Pie? sheet, usingthe colors you assigned to each category. Point out“START” so all students begin to color the piechart in the same place. As you color severalpredictions on the transparency of What Pieceof the Pie?, have students follow you on theirWhat Piece of the Pie? sheet. Then, working

within their group, let them complete the rest oftheir pie chart.

7. Have each group display their stacks of penniesand pie chart sheets. Tell students to save all oftheir sheets for Session Two.

8. Summarize this session by asking:

- What did you use as the basis for yourpredictions?

- What similarities did you discover in thepredictions? Differences?

- Which category did you select as the greatestexpense? Why? The least expense? Why?

- Which three categories did you predict as the topexpenses?

SESSION TWO1. Working with the Class Dollar Predictions

sheet, ask each group to give you its predictions foreach category. As you fill in each group’sresponses on the transparency Class DollarPredictions, have each group fill in theresponses on its sheet.

2. Write the class range of predictions (lowest andhighest numbers) and calculate the class average ofpredictions for one or more of the categories. Tellstudents to write the class range and calculate theclass average for each of the remaining categories.Where necessary, have students round to thenearest whole number. Remind students that thetotal of the averages must equal $1 (or 100percent).

For older studentsAsk each group to calculate the mean, median andmode predictions for all of the categories.

3. As soon as the groups have completed theremaining categories, have each group report itsanswers to determine the range and average of thepredictions in the class. As you complete thetransparency, have each group compare theiranswers, making changes if necessary.

4. Ask:

- Which category prediction had the largest range?The smallest?


- Which category prediction had the highest average?The lowest?

- How did each of your group’s predictioncompare to the range for each category (e.g.,low end, middle, high end)? What are somereasons for the differences?

- Which category did the class predict to be thehighest? How does this compare with yourgroup's highest category? Lowest category?What are some reasons for the differences inhighest and lowest?

5. Distribute the Piece of the Pie in 2000 sheetto each group. Explain that the United StatesDepartment of Agriculture (USDA) collected thisinformation. It provides the actual part of $1 (oractual percentage) each of the categoriesrepresented in 2000. Tell students to read the bargraph on the Piece of the Pie in 2000 andtransfer the data to the last column on their ClassDollar Predictions sheet. Have them star thetop three actual expenses according to the USDA.

6. Distribute the colored-pencil sets or crayons toeach group.

A. Have the students who worked with the WhatPart of a Dollar? sheet in Session One, usetheir group’s sheet to color in the right half ofeach stack of pennies to represent the actualUSDA data.

B. Distribute a new Piece of the Pie in 2000sheet to each group. Using the USDA datafrom the Piece of the Pie in 2000 sheet,have the students who completed the pie chartin Session One, complete the new pie chart forthe USDA data. If necessary, review withstudents the starting spot and the order ofcolors and categories.

7. Have students use the What Part of the Dollarsheet and the two pie chart sheets to compare theirpredictions with the USDA data. Have students usethe mathematical terms greater than and less thanto describe their comparisons. Ask:

- Are any of the categories the same or very close(your prediction and the actual amount)? If so,which ones? Which categories are verydifferent? Why?

- Which group arrived closest to the actual amountin each category?

- According to the USDA data, what are the topthree average expenses? (labor, farm value,packaging) How do your top three predictionscompare to the actual top three?

- How much of every dollar goes to advertising?Transportation? Farm value? Packaging?

- What percentage of average costs for consumergoods goes for labor?

- Did the actual data surprise you? Why?

- What costs were not what you expected? Why?

- What will you think about the next time you goto the grocery store? What do you think causesprices to change? Stay constant? How are youand your family affected by these changes?

- What kind of things might be done to reduce theprice of food we pay at the grocery store? (Lesspackaging, advertising, transporting andothers.)

SESSION THREE1. Ask the students what their instincts tell them about

the way the food dollar is divided up.

- Does anything seem strange?

- If the farmer is receiving 19 cents from everyfood dollar spent, why are so few people infarming?

- Why are there repeated farm crises?

2. Hand out the Farm Costs sheet. Explain that thereason that the USDA has created this "farm value"category is because raw commodities must bepurchased from a producer. They are a realexpense to the processor and to the consumer.This category is not profit. It includes all of thecosts that farmers incur on farm labor, machinery,buildings, interest, taxes, seed, feed, fertilizer, etc.There is not any set amount for each that caneasily fit into the categories the USDA has created.This broad category has been developed becausethe cost of producing one crop or product varies somuch from another.

For example, the Economic Research Service,USDA reported that the total value of farm laborwas $19.7 billion for all agricultural production in2000. Between commodities, there is a huge rangein the cost of labor because some types of


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agriculture are highly mechanized, such as growinggrain crops. Labor amounts to only 5 percent ofthe production expenses in these crops. Otherfarms require a great deal of human labor, atcertain times, because of the commodity produced.On fruit farms, harvest is very labor intensivebecause we have not invented a machine to harvestfresh cherries, apples, grapes or many other freshfruits. (Cherries and grapes may be mechanicallyharvested for processing.) Labor costs for this typeof agriculture are 40 percent of all production cost.

So, the USDA has chosen this method to depictthese expenses to consumers to simplify thestatistics and make the information easilyunderstood.

3. Have the students create their own graph thatrepresents how the farm value portion of the fooddollar is actually spent. Students have two optionsas to how they wish to depict a more accurate costof food. They can either develop an add-on graph,which will show how the 19 cents paid to farmersis spent (A), or add the farm costs into the dollargraph to make it more accurate (B).

A. Students may make a pie graph, bar graphs,cut up the portion of the dollar that the 19cents of farm value depicted in the visualrepresents, or create their own graphic visualof the 19 cents in some other way using thepercentage breakdown given in the FarmCost sheet.

B. Calculate new figures to add the farm costfigures to the original expenses and recreatethe graph of where your food dollar goes.Using the figure of 19 cents, multiply thepercentages in each category given to it andcalculate additional costs for each category theUSDA has created. Some of the farm costcategories differ from the USDA figures and

should either be included as miscellaneousexpenses or new categories should be added.

For example, the farm cost of labor is 10.5percent.$ .19 X 10.5% (.105) = $ .01995 or 2 cents

This 2 cents should be added to the labor costsof 38 cents. The new labor cost is 40 cents.

Repeat this for each category then re-create thegraph in a more accurate depiction.

4. Display their food cost graphs. Ask:

- What have you learned about the amount ofmoney a farmer or rancher actually gets for hisor her crops or livestock? (See Farm Value in theSupporting Information.)

- How will this lesson help you in the future?

- What will you share with family and friends?

EVALUATION OPTIONS1. Have students graph the averages of the class

predictions from Session Two.

2. Evaluate students’ What Part of a Dollar? orWhat Piece of the Pie? sheets or originalgraphs and their ability to compute averages.

3. Students write in their journals a paragraph usingone of the following phrases.

- I was surprised at (how little, how much) thefarmer and rancher actually make because...

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Farm Costs


- The next time I grocery shop, I will be moreaware of...

- I learned that...

- I did not expect that...

- I was not aware that...

4. Write the names of each of the 13 categories ofexpenses on a separate slip of paper and placethem in a hat or box. Divide the class into 13groups and have each group select a slip of paper.Each group writes a brief description of itscategory. Students place the descriptions, withouttheir category name, back in the hat or box. Eachgroup selects a slip of paper, reads the descriptionaloud, and identifies the category. If a group selectsits description, they return it, and select anotherslip of paper.

5. Referring to the Piece of the Pie in 2000graph, rank the following choices from highest tolowest cost to get a jar of peanut butter to thegrocery story: advertising, labor, packaging,peanuts, transportation.

EXTENSIONS AND VARIATIONS1. Continue to work with the USDA data to reinforce

actual expenses for each category. The NationalAgricultural Statistics Service has a variety ofexpenses listed and also provides color graphics atits Web site, which is listed in the Resourcessection.

A. Photocopy the attached Food Dollar, oneper group. The bill is 10 inches long; each inchrepresents 10 percent or 10 cents. Using theUSDA data information from the Piece ofthe Pie in 2000, cut the dollar into theappropriate parts. For example, Farm Value is19 cents ($0.19) or 19 percent. Cut slightlyless than two inches of the 10-inch dollar.Place all the pieces in a hat or box. Divide theclass into 13 groups and have each groupselect one of the pieces of the dollar bill. Thestudents determine the value of their piece ofthe dollar bill (knowing that one inch equals 10cents) and label it as one of the 13 categories.Ask each group to identify their category andthe value of their piece of the dollar. Glue ortape all of the pieces onto a sheet of paper tosee how well they reassemble the dollar. (Forolder students use the Divided Dollarand have them label each categoryappropriately.)

B. Give each group 100 M&Ms or another kindof candy or food. One piece of candy or foodrepresents one penny. Students make piles ofcandy or stacks of food (e.g., crackers) for eachof the categories.

2. Invite a variety of farmers, ranchers or producersto visit the class to explain what he or she grows orraises. Share the Piece of the Pie in 2000 datawith the farmers or ranchers before they come tothe class. Have the speaker(s) explain his or herhighest expenses related to the 12 marketingservices. If possible, locate a producer that exportshis/her products and ask him/her to speak aboutthe special needs of exporting, any additionalsteps, and costs involved. Include in the discussion,the flat growth rate for domestic sales ofagricultural products and the additionalopportunities for foods to be sold to foreignmarkets in the class discussion.

3. Have students take a field trip to a grocery store.Have them compare the range of prices of genericand brand name foods (e.g., cereal). What aresome of the reasons for the price differences?Have students think about packaging, advertising,transporting, and so on. Ask the manager to talkabout different products and the costs associatedwith those products.

4. Students write a story about a farmer or a rancherusing the 13 categories of expenses (farm valueand the 12 marketing services). The story shouldinclude how much money the person gets from thesale of his/her crop or livestock and why. Ask theperson to include some of the situations thatinfluence the costs of his/her crop or livestock andthe amount of money he/she receives. Tellstudents to express the attitude and feelings of thefarmer in the story.

5. Use the FLP lesson “Step by Step” to discover thesequence of steps involved in transferring a productfrom the field to the consumer (path ofproduction). Use the FLP lesson “From Fiber toFashion” to learn about fabric production.

6. Invite a conservationist or environmental educatorto speak to the class about the “indirect” costs ofour economic production. This could include adiscussion of solid waste, air and water pollutioncosts, environmental degradation costs, etc.

R


496

CREDITSFarm Production Expenditures 2000 Summary.Agricultural Statistics Board. National AgriculturalStatistics Service, United States Department of Agricul-ture. July 2001. http://www.usda.gov/nass

Elitzak, Howard. Food Marketing Costs: A 1990’sRetrospective. Economic Research Service, UnitedStates Department of Agriculture. September-Decem-ber 2000. http://www.ers.usda.gov/

Food Marketing Costs at a Glance — In 2000. FoodReview: Global Food Trade, Vol 24. No 3. December2001. http://www.ers.usda.gov/publications/FoodReview/septdec01/5

ADDITIONAL RESOURCESLocal agricultural producers, contractors, transporters,warehouse and store owners or managers; local conser-vation districts, cooperative extension offices, and statedepartments of agriculture. Locate international bank-ers, freight forwarders, or export agents who mayoperate in your community. Ask them to speak to theclass about their work. If none can be found locally,seek them out on the Internet.

Economic Research Service publications, United StatesDepartment of Agriculture, 1301 New York AvenueNW, Washington, DC 2005-4788. http://www.ers.usda.gov

Fact Book of Agriculture. United States Department ofAgriculture. http://www.usda.gov

Farm Facts. American Farm Bureau Federation. 225Touhy Avenue, Park Ridge, IL 60068. (847) 685-8864.http://ageducate.org

General Information and Frequently Asked Ques-tions. 1997 Census of Agriculture. National AgriculturalStatistics Service, United States Department of Agricul-ture. 1997. http://www.nass.usda.gov/census/cen-sus97/cenfaqs.htm

Miller, Roger LeRoy. Economics Today and Tomor-row. Glencoe (Macmillan/McGraw-Hill), 1995.ISBN: 0028231023.

2000-2001 Statistical Highlights of U. S. Agriculture.National Agricultural Statistics Service, United StatesDepartment of Agriculture. 2002. http://www.usda.gov/nass/pubs

Wallace, L. Tim. Agriculture’s Futures: America’sFood System. Springer Verlag. 1987.ISBN: 0387964827.

©2003 Project Food, Land & People Conceptual Framework Reference: II.C.7., IV.B.1., IV.B.1.a.,IV.4.B.1.b., IV.B.2.a., IV.B.2.b., IV.C.1

Wilson, J. Holton and J.R. Clark. Economics, 4th ed.South-Western Thomson Learning. 1996.ISBN: 0538655933.

WEB SITESUnited States Department of Agriculture. 2002. http://www.usda.gov

Economic Research Service, United States Departmentof Agriculture. 2002. http://www.ers.usda.gov

The National Agricultural Statistics Service, UnitedStates Department of Agriculture. 2002. http://www.usda.gov/nass

EDUCATOR’S NOTES

497 ©2003 Project Food, Land & People What Piece of the Pie?

Dir

ectio

ns: P

redi

ct w

hat p

art o

f a d

olla

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ent o

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od g

oes

to e

ach

of th

e 13

cat

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ies.

Rec

ord

your

pre

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for

your

gro

up n

umbe

r. St

ar y

our

top

3 pr

edic

tions

.

CA

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OR

Y

Farm

Val

ue

Labo

r

Pac

kagi

ng

Tran

spor

tatio

n

Dep

reci

atio

n

Adv

ertis

ing

Ener

gy

Pro

fits

Ren

t

Inte

rest

Rep

airs

Bus

ines

s Ta

xes

Oth

er C

osts

GR

OU

PG

RO

UP

GR

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PG

RO

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UP

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WH

AT PART O

F A D

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irections: Each category represents an expense of retailing a food product. You will use the agr eed upon color schem

e to color each stack of pennies.Session O

ne: On the left side of each stack of pennies, color in your group’s predicted num

ber of pennies from the C

lass Dollar P

redictions sheet.Session T

wo: O

n the right side of each stack of pennies, color in the actual expense from the P

iece of the Pie in 2

000.

Farm Value

Labor

Packaging

Transportation

Depreciation

Advertising

Energy

Profits

Rent

Interest

Repairs

BusinessTaxes

Other Costs

50454035302520151050


Farm Value

Labor Advertising Interest

Packaging Energy Repairs

Transportation Profits Business Taxes

Depreciation Rent Other Costs

WHAT PIECE OF THE PIE?Directions: Color in the Pie Chart Legend using the agreed upon colors.Start coloring the pie chart at the “Start” arrow and move clockwise(marked in 2 percent increments). Begin with FarmValue and follow the order in the Pie ChartLegend.

Group Prediction

USDA Data

Check the box for thedata you used.Start


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Farm

Val

ue

Labo

r

Pack

agin

g

Tran

spor

tatio

n

Dep

reci

atio

n

Adv

ertis

ing

Ener

gy

Prof

its

Rent

Inte

rest

Repa

irs

Busi

ness

Tax

es

Oth

er C

osts

$0.400.390.380.370.36

$0.350.340.330.320.31

$0.300.290.280.270.26

$0.250.240.230.220.21

$0.200.190.180.170.16

$0.150.140.130.120.11

$0.100.090.080.070.06

$0.050.040.030.02

$0.010.00

PIECE OF THE PIE IN 2000Pa

rt o

f One

Dol

lar

Spen

t On

Food

(USD

A d

ata)


FARM COSTS

Farm Labor 10.5%

Farm Services 13.5%

Feed 13.0%

Fertilizer, Seeds,Crop-Protecting Chemicals 13.7%

Fuel 3.7%

Interest 5.8%

Taxes 3.7%

Livestock 9.5%

Machinery, Vehicles 6.9%

Rent 8.5%

Supplies, Repairs,& Construction 11.1%

Agricultural Statistics Board, National Agricultural Statistics Service, United StatesDepartment of Agriculture. July 2001. (2000 data)


ACC

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IDED

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OD

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what piece of the pie - north carolina department of ... bar graph, profits, depreciation, farm...

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