Employment Security Department
Labor Market & Economic Analysis Branch
Food Processing
Introduction
It is one of Washington’s first manufacturing industries. Ever since 1866, when a small salmon cannery
was built in Eagle Cliff, food processing has been one of Washington’s economic mainstays. Today, over
880 plants—from the seafood processor in Anacortes to the boutique vintner in College Place, from the
fruit growers cooperative in the Yakima Valley to the bakery in Seattle, the meat packer in Pasco to the
frozen French fried potato processor in Othello—employ 40,000 workers, making food processing the
state’s second largest manufacturing industry after transportation equipment.
Figure 1
Employment in Washington’s Food Processing Industry, 1947-1998
Source: Washington Employment Security Department
45,000
40,000
35,000
Total employment
30,000
25,000
20,000
15,000
10,000
5,000
0
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
Although the food processing industry has generally added employees since the late 1940s, this sector
exhibits cyclical behavior—adding employees during economic expansions while shedding employees
during economic slumps. Food processing’s economic vacillations are not as pronounced as other
manufacturing sectors in Washington. The last few years, however, have signaled a change in food
processing; while the state economy and manufacturing have expanded with new hires, food processing
has languished with some closures and a reduction in employment.
Figure 2
Annual Employment Change in Washington Total Nonfarm, Total Manufacturing and Food Processing,
1971-1998
Source: Washington Employment Security Department
15.0%
Annual Change in Employment
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
1971
1974
1977
1980
Food Processing
1983
1986
Total M anufacturing
1989
1992
1995
1998
Total State N onfarm
Characteristics of the Food Processing Industry
Food processing occupies a powerful position within the food and fiber system. The industry has been
likened to the center of an hourglass: raw agricultural commodities from more than two million farms and
ranches flow through roughly 20,000 processors, which in turn sell their array of processed products to
more than half a million food wholesalers and retailers. Over a hundred million domestic households
consume the meat and dairy products, canned and frozen fruits and vegetables, milled grains, bakery
products, beverages, and seafood.
The importance of food processing lies in its various economic functions. Foremost, processors convert
food materials into finished, consumer-ready products through the application of labor, machinery,
energy, and management. They employ handling, manufacturing, and packaging techniques to add
economic value to raw commodities harvested from the farm or the sea. Virtually all agricultural products
incur some degree of processing before reaching their final use. The value added varies by commodity:
steers become meat, potatoes are turned into French fries, wheat is made into flour, apples become juice
or sauce, and fresh salmon emerges as canned salmon. The farm value of fruit and vegetable products
at the retail level—frozen peas, for instance—is about 20 percent, meaning that 80 percent of the retail
value is “added” to the raw product during processing and distribution.
Adding value to farm products and other material ingredients is the principal way that food processing
contributes to state and national economies. Such “value-added” processing activities represent the
creation and distribution of wealth, which translates into additional jobs and increased incomes.
Finally, processors act as important middlemen within the food system. Consumer demand and
agricultural supply information come together at the food processing center. For instance, a tight supply
of frozen corn at the retail level is eventually transmitted into higher processor prices, a greater
willingness to pay for key inputs, and a price signal to farmers to expand production or sell off their stored
crop. In contrast, an unexpectedly short crop induces processors to raise their prices to retailers and
distributors, which subsequently prompts a decrease in consumer demand.
Scope and Definitions
This industry report uses industry definitions and concepts that underlie the U.S. government’s Standard
Industrial Classification (SIC) system. In the SIC system, food processing is a major industry, one of
twenty such industries that form the manufacturing sector, entitled food and kindred products. According
to the Standard Industrial Classification Manual, there are forty-nine separate food processing industries.
Each of the approximately 20,900 food processing plants operating in the United States in 1997 was
placed in one of these forty-nine industry subsectors, and their food products were further divided into
170 well-defined food product classes.
Food and kindred products (SIC 20) is organized into the following nine major groups:
 meat products (SIC 201)—including meat packing plants; sausages and other
prepared meats; and poultry slaughter houses and egg farms;
 dairy products (SIC 202)—including fluid milk, butter, cheese, and ice cream;
 preserved fruits and vegetables (SIC 203)—including canned and frozen fruits and
vegetables, canned and frozen specialties, dried and dehydrated fruits and
vegetables, pickles and salad dressings;
 grain mill products (SIC 204)—including flours, cereal breakfast foods, flour mixes
and doughs, and pet food;
 bakery products (SIC 205)—including bread and other bakery products, cookies, and
crackers;
 sugar and confectionery products (SIC 206)—including cane and beet sugar, candy,
chocolate, chewing gum, and nuts and seeds;
 fats and oils (SIC 207)—including vegetable and animal oils and fats, shortening, and
margarine;
 beverages (SIC 208)—including malted beverages, wines, liquors, soft drinks, and
flavoring extracts; and
 miscellaneous food (SIC 209)—including fresh, canned and frozen seafood; roasted
coffee; potato and corn chips; and macaroni, spaghetti, and pasta products.
Table 1
Employment by Washington Food Processing Subsector, 1981-1998
Source: Washington Employment Security Department
Sector
1981
1985
1989
Average
1998 Annual Change
1993
Meat Products
Dairy Products
Preserved Fruits and Vegetables
Grain Mill Products
Bakery Products
Sugar and Confectionery Products
Fats and Oils
Beverages
Misc. Food and Kindred Products
4,116 3,883 4,318 3,885 4,537
1,698 1,592 1,748 1,817 1,728
11,250 11,256 12,665 13,572 13,518
1,193 1,185 1,512 1,681 1,761
3,019 2,850 2,999 3,606 3,171
646
754
732
628
831
185
157
170
144
273
3,773 3,630 3,179 2,966 3,175
5,824 5,485 8,403 10,425 11,012
0.6%
0.1%
1.2%
2.8%
0.3%
1.7%
2.8%
-0.9%
5.2%
Total Food Processing
31,704 30,792 35,726 38,724 40,006
1.5%
Figure 3
Number of Food Processing Establishments in Washington, 1981-1998
Source: Washington Employment Security Department
1,000
Number of establishments
900
800
700
600
500
400
300
200
100
0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Meat Products
Dairy Products
Preserved Fruits and V egetables
Grain Mill Products
Bakery Products
Sugar and Confectionery Products
Fats and Oils
Beverages
Misc. Food and Kindred Products
1997
1998
Economic Contribution of Food Processing to Washington State
In 1996, the Washington State food processing industry shipped products worth $9.83 billion. This
represents 13.7 percent of the state’s total value of manufacturing production worth over $71.9 billion for
that year. Fourteen percent ($1.37 billion) of food processing’s total value of production was shipped to
foreign export markets.
Preserved fruits and vegetables is the leading food processing sector in Washington, with one-fourth of
the state’s production value ($2.54 billion in 1996). Other prominent sectors in the state are
miscellaneous food processing ($1.69 billion); dairy products ($1.62 billion); meat products ($1.36 billion);
and beverages ($1.31 billion).
Why is Washington such a food processing powerhouse? The principal reason is that Washington has
an abundant and diverse agricultural base, making the state one of the nation’s foremost producers of
agricultural commodities. Besides being a significant producer of field crops and livestock, Washington is
a prominent producer of vegetables and fruit commodities. In 1995, addition to being a major agricultural
state, Washington is a major food processing state in terms of value added. In 1996, the food processors
in Washington added a further $3.58 billion to the state’s agricultural production valued at $5.6 billion,
implying that over half of value of raw product grown in-state was further processed within Washington.
Like agriculture, Washington’s food processing industry is relatively diverse, though dominated by two
subsectors—preserved fruits and vegetables and miscellaneous food products. These categories
account for more than 60 percent of the state’s food processing employment and half of the industry’s
value added.
How important is food processing in Washington State? One set of studies looks at the relative
proportion of a state’s food processing output and compares it with the nation. The observation that a
state’s production concentrates in a particular food processing sector suggests that the state produces
more than it needs and therefore exports the surplus. A simple measure used for food processing export
is a location quotient, an index of production (or employment) concentration which assesses an industry’s
share of total production (or employment) in a state. Production is put into index form by dividing its
relative share in the state by the industry’s relative share of total production in the nation. An index
number greater than 1 suggests that the state produces a surplus in the food processing sector which is
exported elsewhere. Accordingly, an index number of 1 would indicate little or no trade while an index
number less than 1 would suggest that the state imports the food processing products. In terms of
production, Washington food processing had an overall index of 1.1 in 1996, implying that a portion of its
production is shipped outside the state. By this measure, preserved fruits and vegetables and
miscellaneous food processing are the leading sectors with an index of specialization of 2.45 and 2.18
respectively.
Figure 4
Index of Specialization: Value of Production for Washington Food Processing, 1996
Source: U.S. Bureau of Census, Annual Survey of Manufacturers
2.75
2.50
2.25
2.00
Index of Specialization
1.75
1.50
1.25
1.00
0.75
0.50
0.25
0.00
Meat Products
Dairy Products
Preserved Fruits &
Vegetables
Grain Mill Products
Bakery Products
Sugar&
Confectionary/Fats &
Oils
Beverages
Misc. Food Products
Total
In absolute terms, the greatest number of food processing jobs are concentrated in Washington’s larger
metropolitan areas. More than a third of the total state food processing jobs are found in King County, the
state’s largest metropolitan county. A truer picture emerges, however, in assessing food processing jobs
as a relative share of a county’s total employment base. In relative terms, food processing is almost
insignificant in many of the state’s major metropolitan areas. The greatest local impact of food processing
employment lies in Washington’s smaller, rural counties; many located east of the Cascades.
Table 2
Total Employment, Food Processing and Agricultural Employment in Washington State and Selected
Areas, 1997
Source: Washington Employment Security Department
Area
Total
Employment
Food
Processing
Employment
Agricultural
Employment
Percent Ag. &
Food Process.
of Total
Employment
STATE TOTAL
2,846,600
41,342
86,327
4.5%
Western Washington
2,241,160
25,247
16,857
1.9%
Eastern Washington
605,440
16,095
69,470
14.1%
STATE AGRICULTURAL AREAS
Columbia Basin
41,150
3,886
10,499
35.0%
Adams County
7,900
1,084
2,669
47.5%
Grant County
33,250
2,802
7,829
32.0%
North Central
85,470
780
18,001
22.0%
South Central
111,820
4,151
21,653
23.1%
South Eastern
111,570
5,345
13,495
16.9%
Benton & Franklin Counties
86,600
3,412
10,672
16.3%
Walla Walla County
24,970
1,933
2,823
19.1%
Eastern
255,420
1,933
5,824
3.0%
Spokane County
195,900
1,562
1,402
1.5%
Other Eastern Counties
36,020
362
1,754
5.9%
Notes: Total employment and agricultural employment have been adjusted to eliminate the effect of dual
job holding. Detail may not add to total because of rounding.
Washington’s food processing industry had $1.43 billion in industry earnings in 1997. This was almost 9
percent of all manufacturing earnings and 1.5 percent of total state industrial earnings. Food processing’s
earnings trend over the last quarter of a century reveals an industry with rather steady relative earnings
growth except for the long period in the 1980s that was triggered by severe national recessions.
Figure 5
Real Earnings of Washington’s Food Processing Industry, 1969-1997
Source: U.S. Bureau of Economic Analysis
$1,500.0
Millions of Chained 1997 Dollars
$1,400.0
$1,300.0
$1,200.0
$1,100.0
$1,000.0
$900.0
$800.0
$700.0
$600.0
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
According to the Washington Employment Security Department, Washington covered food processing
workers posted an average wage and salary of $30,618 in 1998. This was below the state average
covered wage ($33,922), but considerably below total manufacturing ($42,247).
Outside of
miscellaneous products, subsectors with the highest average food processing wages were those with the
smallest share of employment. Reasons for the wage disparity are numerous. Some subsectors are less
seasonal; still others had equipment and production processes that require more highly-skilled workers.
In general, those workers with below average covered wages were in more labor-intensive and more
seasonal subsectors.
Table 3
Real Average Wages for Washington Food Processing Workers, 1981-1998 (1998 dollars)
Sources: Washington Employment Security Department, U.S. Bureau of Economic Analysis
Sector
1981 1983 1985 1987 1989 1991 1993 1995 1997
1998
Meat products
$32,767 $28,691 $26,533 $24,936 $23,441 $22,285 $22,853 $22,665 $22,912 $24,334
Dairy products
$44,324 $46,084 $42,418 $39,960 $35,564 $34,716 $34,727 $35,048 $33,845 $34,751
Preserved fruits & vegetables $24,029 $24,362 $24,628 $23,380 $23,472 $23,257 $23,849 $25,216 $25,868 $27,241
Grain mill products
$34,610 $33,193 $34,313 $33,988 $33,913 $31,374 $34,641 $34,705 $35,409 $39,982
Bakery products
$34,430 $33,646 $32,954 $32,448 $32,016 $28,382 $28,278 $27,767 $27,580 $28,836
Sugar & confectionery
$24,308 $24,433 $21,941 $20,240 $22,090 $20,148 $19,419 $19,485 $20,056 $25,247
Fats & Oils
$36,074 $34,481 $30,818 $27,230 $27,326 $27,214 $29,857 $29,723 $27,941 $29,238
Beverages
$38,424 $37,305 $35,821 $36,585 $35,878 $32,485 $33,765 $34,039 $31,629 $33,127
Misc. Food & kindred
$26,821 $25,837 $25,347 $26,281 $28,315 $28,770 $30,758 $31,261 $31,472 $35,438
Total, Food & kindred
$29,941 $29,154 $28,348 $27,610 $27,452 $26,617 $27,702 $28,313 $28,558 $30,618
Total manufacturing
$38,352 $37,909 $38,024 $37,876 $37,338 $37,667 $38,018 $38,942 $40,954 $42,247
Total nonfarm
$28,783 $27,789 $27,313 $27,304 $27,167 $27,928 $28,575 $29,046 $31,504 $33,922
The seasonal nature of food processing and the skill requirements are further illustrated by a profile of
average hourly wages. In 1997, more than half of all food processing workers earned less than $12 per
hour.
Figure 5
Food Processing and Total State Employment Share of Hourly Wages, 1997
Source: U.S. Bureau of Economic Analysis
25.0%
Share of Total Employment
20.0%
15.0%
10.0%
5.0%
0.0%
<$6
$6-$8
$8-$10
$10-$12
$12-$14
$14-$16
$16-$18
$18-$20
$20-$22
$22-$24
Misc. Processing
Other
$24-$26
>$26
Average H ourly Wage
State
Food Processing
Fruit & V egetable Processing
Note: Other refers to the remainder of food processing, including meat and dairy products, grain mill
products, bakery products, sugar & confectionery, fats & oils, and beverages.
The labor force in the food processing industry is dominated by operatives and laborers. Common food
processing occupations within this group are machinists and operators, cannery workers, bakers,
butchers, inspectors, hand packers, graders, and industrial truck operators. Clerical and administrative
support occupations are also important in food processing.
Table 4
Occupational Profile of Food Processing Workers in Washington, 1998 and 2008
Source: Washington Employment Security Department
Estimated 1998
Projected 2008
Food Processing, SIC 20
Percent of
Percent of
Estimated
Total
Projected
Total
Employment Employment Employment Employment
Managerial & Administrative
Professional, Paraprofessional & Technical
Sales & Related Occupations
Clerical & Administrative Support
Service Occupations
Agriculture, Forestry & Fishing
Production, Operating & Maintenance
Operators, Helpers & Laborers
Undefined Occupations
TOTAL
1,982
1,200
1,291
3,304
609
911
5,685
22,678
3,542
41,202
4.8%
2.9%
3.1%
8.0%
1.5%
2.2%
13.8%
55.0%
8.6%
100.0%
2,190
1,392
1,346
3,425
589
992
6,767
24,684
4,044
45,429
4.8%
3.1%
3.0%
7.5%
1.3%
2.2%
14.9%
54.3%
8.9%
100.0%
Outlook for Washington Food Processing
Although growth trends in U.S. trade of processed foods are expected to continue into the near future, the
pace is slowing. The trade surplus enjoyed by U.S. processed foods will continue but the surplus is
shrinking due to the recent economic crisis in Asia and the strengthening of the U.S. dollar. Although
U.S. processed food exports were flat in 1998, U.S. exports of high-value-added consumer-packaged
foods grew about 1 percent, while low-value-added exports fell almost 1.5 percent.
Trade in value-added products is generally more sensitive to income levels and income growth in
importing countries than is trade of raw agricultural commodities. As income levels have increased in
smaller, less developed countries, these nations have become the fastest growing destinations for U.S.
processed food exports. In particular, the newly industrialized nations of East Asia have been
responsible for a significant portion of the recent surge in U.S. processed food exports.
How do such trends bode for Washington’s food processors? Given Washington food processors’
dominance in low-value-added products and their increased orientation towards foreign export markets,
prospects are modest at best. The appreciation of the U.S. dollar and the lingering effects of the Asian
economic crisis are important factors in determining near-term prospects for Washington food processors.
Projections for food processing indicate that employment will decline for the remainder of the 1990s.
Food processing is slated, however, to recover during the next century with modest employment growth
of 0.3 percent per annum between 2000 and 2020.
Figure 8
Washington Food Processing Wage & Salary Employment Forecast, 2000-2020
Sources: Washington Office of Financial Management, Washington Employment Security Department
45,000
40,000
Total Employment
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
1995
2000
Preserved Fruits & V egetables
2005
2010
M iscellaneous Food Processing
2015
Other Food Processing
2020