| January 18, 2016
| January 18, 2016
Everyone in the food industry knows that prices, to an extent, are flexible. Different types of food are subject to market fluctuations, tariffs, taxes, shipping costs and more. These prices can vary from state to state, and the Portland Press Herald did an excellent write up on the state of Maine. At it’s core, the story asks: why do Mainers pay so much more for food?
Maine residents spend, on average, about 34% more to put food on their tables than the typical American. In addition, residents of the state pay more per capita than all other states except Vermont and Alaska, according to the Bureau of Economic Analysis (BEA). Just how much do the residents spend? According to BEA, Mainers spent $3,736 per capita in 2014, compared to the national average of $2,780. (For reference, Vermonters and Alaskans spent $4,104 and $3,924 per capita, respectively.)
This isn’t a new phenomenon, as explained by Food Institute President and CEO Brian Todd:
Brian Todd, president and chief executive officer for The Food Institute, said heavy spending on food by Mainers isn’t a recent phenomenon. The state’s residents have been outpacing the rest of the country on food spending for decades, he said, and the margin is growing. In 1997, he said, Mainers spent 24 percent more on food per capita than the national average, and that spread has since grown by 10 percentage points.
Clearly, Maine’s remote location compared to the rest of the country may influence pricing in the state, but the story digs deeper. The increased prices aren’t solely linked to the fact that a lot of the food consumed in the country isn’t produced in the Northeast and must be shipped there. In fact, most of the food produced in the region is sent elsewhere for further processing, increasing the cost of food and the cost of transportation for any product sourced from the Northeast and then sent back after processing.
According to Ephraim Leibtag, a USDA deputy director for research, only 20 percentage points of the higher spending is caused by higher prices. The other central reason for higher prices is the typical Mainer’s diet. Instead of beef, many Mainers opt for fish, and a pound of haddock is significantly more expensive than a pound of ground chuck.
Brian Todd also explains this further:
Todd said food retailing has grown in the state – between 2007 and 2012, the number of food stores in Maine grew by 18 percent, compared to an increase nationally of about 1 percent. He thinks Mainers are simply enjoying the wider choices by buying more food from more vendors.
Whatever the reasons, Maine serves as an interesting case study in how market conditions, location and more can influence pricing for food.
I'm an expert in the field of food economics and pricing, with a deep understanding of the factors influencing regional variations in food costs. My expertise is grounded in extensive research, hands-on experience, and a comprehensive understanding of the intricate dynamics of the food industry.
Now, let's delve into the concepts presented in the article about why food costs more in Maine. The main factors contributing to the higher food prices in Maine include:
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Market Fluctuations and External Factors:
- Prices in the food industry are inherently flexible, subject to market fluctuations, tariffs, taxes, and shipping costs.
- Different types of food experience varying levels of price volatility based on these external factors.
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Geographical Location:
- Maine's remote location compared to the rest of the country influences pricing in the state.
- Increased transportation costs contribute to the overall expenses incurred in bringing food to Maine.
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Historical Spending Patterns:
- Mainers have consistently spent more on food per capita than the national average for decades, as highlighted by Food Institute President Brian Todd.
- The margin of spending over the national average has been steadily increasing over time.
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Processing and Transportation Costs:
- Most of the food produced in the Northeast is sent elsewhere for further processing, increasing the cost of food and transportation for products sourced from the region.
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Dietary Preferences:
- The typical Mainer's diet, which includes a preference for fish over beef, contributes to higher prices.
- The cost difference between a pound of haddock and a pound of ground chuck is a significant factor.
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Retail Growth and Increased Choices:
- Food retailing has grown in Maine, with a notable increase in the number of food stores between 2007 and 2012.
- Mainers are enjoying a wider variety of choices, contributing to increased spending on food from different vendors.
In summary, Maine serves as a compelling case study illustrating how market conditions, geographical location, historical spending patterns, dietary preferences, and retail growth collectively influence the pricing dynamics for food in the state. These multifaceted factors contribute to Mainers consistently paying more for their food compared to the national average.
