Food And Nutrition: How Do We Spend Our Food Money?

Food And Nutrition: How Do We Spend Our Food Money?

• Introduction

Food is the most important and basic requirement for survival. Foods come to us in different forms. They can be classified into two major groups based on their importance.

Group A – Foods which provide the basic material for our energy needs.
Group B – Foods which supplement the items in Group-A above.

In Group-A we include commodities which provide energy for our daily living. The commodities like rice, wheat, jowar, bajra, ragi, pulses [dals and grams of different types], basic edible oils, etc. can be grouped in this category. Remember that these commodities are so important that you cannot survive without these items. Your consumption of these items will not depend upon whether your income is high or low, whether you live in the east or the west, whether you belong to one social group or the other. You select one or more commodities in this group depending upon your taste and preference, income, etc. But, basically, you have to consume them for your survival.

In Group-B we can include a number of other commodities which you consume as food. Commodities like milk, vegetables, meat, eggs, fish, fruits, sugar, etc., can be grouped in this category. They supplement the items listed in Group-A above. From the nutritional point of view, these foods are also important to us but they are not as basic for our survival as the ones in Group-A. Your consumption of these commodities depends largely upon your income, taste, and preferences, food habits the place you live in, and to a large extent the price you have to pay for these commodities. The importance of these commodities in your diet will also depend upon age, sex, health, the type of work you do, and your likes and dislikes.

Now you understand that there are a number of commodities which constitute ‘food’ and the importance of each commodity is different. Remember that there are other items too which can be called food but they use the commodities listed above in their preparations. For example, in bread, you use wheat, in ice creams you use milk and sugar, etc.

In addition to the above, you also use spices and condiments to add taste to your food. Chilies, coriander, turmeric, cardamom, etc. are some examples.

 

• Food Expenditure

The money which you spend on buying your food items can be called food expenditure. Your expenditure on food may also come from other sources and not necessarily from you. For example, you may get some food items as gifts [say rice or wheat grown on your family farm in your village] or you may grow them in your garden [like vegetables]. Sometimes, Government policies like subsidies also help you spend less money on food.

As you have seen earlier, the consumption of food is important for our survival. Hence, expenditure on food forms the most essential item in our total expenditure. The amount of money spent on food depends upon the food items consumed. You already know that different people consume different food items and hence their expenditure on food will also be different.

 

• Factors Influencing Food Expenditure

Income

It will be easier to understand and evaluate the amount of expenditure on food when you classify consumers into different classes of income earners.

Let us take the case of those who belong to low-income groups. In popular terms, they are called poor people. Though their income is very low, they have to eat some food to live and without food, they cannot think of earning even that low income. Their requirement of energy is the same as the energy requirements of others in their age group. Hence, they have to spend most of their earnings on basic food and as a result, they have to select cheaper items. Food articles like wheat and rice are considered to be superior than other grains like bajra, ragi, and jowar which are usually called coarse cereals. Even within the rice, you have coarse varieties and medium and fine varieties. The cost of buying these commodities will vary because you pay different prices when you buy them. Similarly, there are other items of food that are available at cheaper rates like jaggery instead of sugar which is more costly. There are also cheaper varieties of meat, fish, etc., available on market. However, people in the lower-income groups have to spend a large part of their income on food items. They are, therefore, left with very little money out of their income for expenditure on other items.

One important factor you should remember about food requirements is that a child or an adult requires the same amount of calories whether he/she is in the higher income group (rich) or lower income group (poor). Hence, commodities in the food Group-A especially the food grains like rice, wheat, jowar, etc., are also referred to as wage goods, since a major portion of the wages of the lower income groups are spent on the consumption of these commodities.

The pattern of expenditure on food by the people in the middle income group will be a little different from that in the lower income groups. Because of a higher income they can afford to buy food articles which are better in quality, appearance, package, etc. Though the requirement of calories is the same for people in this category, they try to fulfill this requirement by consuming better quality of food. In this group you often see people buying fine cereals like rice and wheat. They consume more vegetables, more milk, better quality of meat, fish, etc., depending upon their taste. Another important feature of this group is that people are left with more money for their expenditure on other items of necessity. Hence, you see them, living in better houses, using transport facilities, wearing better clothes, sending children to good schools for education, spending money on recreation, entertainment, etc. Hence, you observe that as a person moves up the ladder in the income group, the proportion of his expenditure on food in his total expenditure will fall.

You will be able to observe a similar trend in spending on food items by people who belong to high income groups [popularly called the rich]. Their expenditure on food items forms a very small fraction of their total spending. You may also see them consuming the best quality of food available in the market. They will supplement their food consumption with commodities whose prices are high. A major portion of their income will be on ostentatious goods [like posh houses, cars, ornaments, etc.]. To sum up, the amount of money spent on food increases with increase in the incomes of the people, but the proportion of expenditure on food in the total expenditure falls as the income increases. This leads to an important character of the demand for food items, i.e. as the income of a person increases, the extent of increase in the consumption of food is much less than the extent of increase in his income. Thus the income elasticity of demand for food is low.

 

Food Price And Quantity

In addition to the income factor influencing the expenditure on food within a given income group and the total expenditure on food, prices of individual food items determine the pattern of our consumption. Many of the food items you consume can be substituted for one another. Rice for wheat, tea for coffee, different vegetables, milk from cow and buffalo, etc., are good examples of such substitutes. If the price of one commodity in a group is high, you tend to buy another commodity that gives you the same service (utility) and which is cheaper. Technically this is the type of effect called a high cross elasticity of demand. This factor is very important when you plan your expenditure on food and also to determine how much money you spend on each food item.

Above all, the price you pay for the food items you buy and the quality and quantity of these commodities you buy will determine your total expenditure on food. In case of those food items we listed in Group-A earlier, you will not be able to make any alterations in the quantity of commodities you consume [though you may alter the quality] because they are important for your living. So, whether the prices of commodities in this group are high or low, the quantities consumed will not change much. This phenomenon is referred to as a condition of inelastic demand. This means that the extent of change you can bring about in the quantity of a commodity you consume is much less than the extent of increase in the price of the commodity which causes such a change. The reverse is also true.

It is also clear from the foregoing discussion that food articles in Group-B are not subject to such rigid behavior patterns. You may increase or decrease the level of your consumption of these commodities depending upon the price you pay for them. The best examples that you can find of such types in your daily consumption are those seasonal vegetables like cabbage, cauliflower, and many others which are cheaper during winter. You tend to consume more of them. During summer, they will be sold at higher prices, and hence, you do not buy them. In the case of fruits, apples are more easily available in winter and mangoes in summer, etc.

So You See That The Expenditure Incurred On Food Depends Upon:

1 – Your income.
2 – Your tastes and preferences for different types of food.
3 – The extent of substitutes available for the food you consume.
4 – The price you pay for the food items you consume.

 

• Food Budgeting

A budget is simply a statement of income [earnings] and expenditure [spending]. Your earnings may come from different sources. These may be in the form of salaries, interest earning, gifts, sale of assets, sale of produce [in the case of producers], etc. Income from different sources may materialize at different periods. So also, there are different avenues for expenditures. Expenses on your consumption needs, housing, clothing, medicines, special occasions, etc., will have to be incurred at different points of time. A good family is one which plans its expenses in such a way that they are incurred at the time when incomes are earned. Hence a budget always goes with a plan.

What is a plan and what is its relevance to your daily life? Any act of yours which is thought of well in advance before it is actually performed can be termed a plan. A plan thus involves a detailed thinking about your needs for the present and the future, your ability to fulfill these needs [in terms of money, age, physical capabilities, etc.], and how best you can achieve your needs with the least cost and trouble to yourself. The best example of such a plan in your daily routine is what best you can do for your children’s education, their marriage, your life after retirement, etc. You will have to plan well in advance for such occasions because these involve high expenditures which are beyond affordable levels. Hence, a plan is basic to whatever you do, and making arrangements for money to achieve these plans is what you call budgeting.

What is food budgeting and how does it help us? You have already seen earlier in this post on food expenditure that there are different commodities which you consume to meet your food requirements. Within each group of food items, there are a number of commodities. For example:

Food Grains – Wheat, Rice, Jowar, Bajra, Ragi, etc.
Pulses – Gram, Urad, Moong, etc.
Edible Oils – Groundnut Oil, Mustard Oil, Palm Oil, Coconut Oil, etc.
Sweeteners – Sugar, Jaggery.
Beverages – Tea, Coffee, Fruit Juices, etc.
Vegetables – Potato, Onion, Tomato, Cauliflower, Cabbage, Beans, Greens, etc.
Fruits – Apples, Oranges, Grapes, Mangoes, etc.
Others – Meat, Fish, Egg, Mushrooms, etc.

In addition to the above, you find a number of spices and condiments to add to your taste. In the present day, a number of fast and ready-to-eat foods are also available in the market. These foods form a very good supplement for the foods prepared at home. They also save the housewife a lot of cumbersome procedures at home.

As you already know there are a number of alternative commodities which are available to fulfill your family’s requirements of different foods. Hence, it is very important to plan well your purchases of food items keeping in mind your income, the prices you have to pay, the quality of the commodities available, your taste, etc.

 

• Preparation Of Food Budget

A family comprises children, adults, and the aged. The requirements of each member of the family will be different. The requirements of an individual also change at different periods of time. Persons in each group have the need for carbohydrates, proteins, vitamins, minerals, and other nutrients. These nutrients are supplied by a large number of food items available. If you observe a little keenly, you see that some food items are available only at certain periods of the year [for example, mangoes around summer] and some other foods may be available throughout the year but will be cheaper at particular times [for example, vegetables during winter]. Your intelligence lies in meeting your requirements of nutrients [which are usually stable throughout the year] with minimum expenses. This involves a careful selection of different items available to meet these requirements at different points of time.

Before actually preparing a budget, you should thus ascertain the different food items available and the prices at which they are available. This will help you to prepare a good food budget commensurate with your income.

 

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