Food and Agriculture: A Value Chain Analysis

Household consumption (Personal Consumption Expenditure) of food and drink was €10.5 billion in 2018. The largest product category was drink, amounting to €2.6 billion. Alcoholic drinks accounted for €1.7 billion of this. Households spent €2 billion on meat. The third largest item of household consumption was other food products, with a value of €1.2 billion. This category includes tea, coffee, ready-made foods and processed snacks.

Food and drink consumed in pubs and restaurants are not included in this product grouping. Households spent approximately €7.1 billion on food and approximately €5.5 billion on drinks in pubs and restaurants.

Household consumption is typically valued in purchasers’ prices. Purchasers' prices are the price at which the final consumer pays for the good. This price consists of the basic price (the amount received by the producer) the addition of product taxes, the subtraction of product subsidies and the margin received by the seller, such as a supermarket. Figure 4.2 gives an approximate breakdown of these components of household consumption of food and drink in purchasers' prices. Taxes mostly consist of excise and VAT on alcoholic drinks. There are no product subsidies on food products in Ireland, although there is a small product subsidy on some agricultural products. The allocation of trade margins by product is modelled based on survey and administrative data.

Imported goods for household consumption at basic prices was worth approximately €3.3 billion, or 51% of household consumption at basic prices. Imported goods for household consumption was calculated by selecting imports by retail firms and many wholesale firms and using the United Nations Broad Economic Categories classification system to establish whether a product is likely to be a retail product. Users should bear in mind that this methodology only produces an approximation. The product with the largest share of imports as a proportion of consumption was perennial crops (a category that includes most fruits), followed by grain mill products (such as flour), and other food products (such as prepared food and sweets). The category with the lowest import share was live animals and animal products (such as eggs).

Households have been paying less and less for food and non-alcoholic drink over recent years. The food and non-alcoholic drink in an average weekly shop that cost €100 in 2008 would cost €86 in 2018 and €84 in 2020. The Consumer Price Index shows that the prices in this category have a steady downward trend since 2013. Of the three components (basic price, net taxes, margins) net taxes are a very small part of the total. So the basic price obtained by the agriculture and food producers and/or the margin obtained by the traders have been declining.

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