In June 2017, ABARES released a report that examined recent trends in food demand in Australia and a range of food security issues (see Hogan 2017). This report provides updated information on Australia's food market and household food expenditure patterns, including estimates of key drivers of food demand growth in recent decades (unless otherwise specified, food excludes alcoholic beverages). Notably, food expenditure patterns across four population sub-groups are examined using the most recent ABS household expenditure survey (HES) data for 2015-16 (released in late 2017; ABS 2017a). Population sub-groups include household income, household net worth, age category and main source of income (including households highly reliant on government pensions and allowances). In this report, real values are reported in 2015-16 prices (nominal values are adjusted for inflation using the consumer price index).
Food is a necessity good overall, although food products and services may vary widely in terms of price and quality. At a minimum, food is required to meet the basic energy and nutrition needs of people. However, total food demand is influenced by a range of factors, including population size, consumer incomes, food prices, food quality, and consumer tastes and preferences (including lifestyle choices).
The information in this report is relevant to two key aspects of the food market.
- Food security—is there a reasonable level of food security, based on average food expenditure per person, in each population sub-group? The economic justification for transfer payments to low-income households is based on equity considerations.
- Economic opportunities for farmers and other food providers—are there significant population sub-groups where there is a revealed preference, at least on average, to pay more for food products and/or services with reliable quality attributes? This information is relevant for considering future market developments and the extent to which there may be economic opportunities for Australia's farmers, food producers and others in the domestic food supply chain to value add.
An important issue for Australian food producers is that a potential price premium for food quality is dependent on consumers (in either the domestic or export market) having relevant information about the quality attributes of Australian food produce (or food products and/or services more broadly). Food labelling is an important method used to identify quality attributes that have the potential to earn a price premium in the end use market.