Unless we grow it ourselves, our food gets to us because someone puts it on a truck or a boat and sends it to us. But transportation is only one part of our food’s journey. Economists use the term ‘supply chain’ to describe how food travels from its source, through the production process, and into its final form as a product. By looking at different steps on the supply chain, also sometimes called a value chain, we can better understand all the work it takes to put together a simple meal.
The chain doesn’t actually start with farmers or fishermen, but with all the things they need to do their jobs—economists call these inputs. Three particularly important inputs for farmers are seeds, fertilizer and machines. Even something as simple as seeds are big business, with large companies developing and selling seeds with names like “Genuity® VT Double PRO® RIB Complete®” (a type of corn seed) and “INTACTA RR2 PRO® soybeans”.
Once farmers have the equipment they need, the production starts, with farmers planting the crops, maintaining them and eventually harvesting them. From here, the food gets shipped to a cleaning or processing center, before either being passed on for further processing and packaging or shipped directly to markets and grocery stores for sale.
Each step in this chain is a part of agribusiness, a term used to describe the range of businesses related to producing, processing and selling our food. Farming is actually a fairly small part of agribusiness. In the US, farming accounts for about 1 percent of the economy, while agriculture related activities’ account for nearly 5 percent. It’s good to keep this in mind when thinking about food prices, as each stage in the supply chain affects what you pay for groceries and meals out.