Archive for Sunday, March 8, 2009

Unreal prices

Consumers should applaud supermarkets’ protest of what they see as unfair pricing by food manufacturers.

March 8, 2009


With prices for grain and gasoline going down, you’ve probably noticed dropping prices at your local grocery store.

You haven’t? Well neither have the nation’s grocery store owners, some of whom are lodging a protest with food processors and wholesalers.

A few months ago, when grocery prices shot up significantly, blame was assigned to high commodity prices and especially gasoline prices. Wheat and corn prices were at record levels, and the price of gasoline and diesel fuel was sky high. The high cost of grain, along with the high cost for the fuel needed to get products to market seemed to justify the higher prices even though the grocery bill was making a bigger dent in family budgets.

Unfortunately, once prices go up, they are far less likely to come back down. Nonetheless, U.S. consumers are getting some assistance from supermarkets that are taking their case to the nation’s largest food manufacturers.

Some examples cited by grocers and included in a news story this week make a pretty strong argument:

• The wholesale price of a box of Kraft macaroni and cheese has increased an average of 9 percent in the last year in spite of the fact that wheat and cheese prices have plunged by 38 percent to 68 percent during that time.

• The wholesale price of a Nestle’s ice cream product has risen 14 percent while the prices dairy farmers receive for their milk has dropped by 40 percent.

The food companies say their prices are fair because they are coping with rising prices themselves, but that argument doesn’t make a lot of sense. It’s true that the cost of corn is only a tiny fraction of the cost of producing a box of corn flakes, but the price of corn, along with virtually every other production cost, has declined, so where are the increased costs?

With the job market being what it is, it’s unlikely that labor costs have risen significantly. Gasoline prices, which took much of the blame for rising prices, are about half what they were a few months ago. Even interest rates are down.

As a top executive in the company that owns Safeway concluded, it’s “disingenuous” to ask consumers to pay higher prices when virtually every cost of producing those products has declined.

We agree and applaud the efforts of the nation’s grocers to try to hold food manufacturers accountable.


Stephen Roberts 9 years, 1 month ago

Just because the market prices for certain products decreased does not automatically mean the price should decrease. Did the manufacturers enter into a hedging contract for corn as the prices went up? Did the prices for the other ingredients?

Maddy Griffin 9 years, 1 month ago

Somebody's making some extra cash here, at the consumer's expense. If all the cost increases were due to the cost of transporting when fuel costs went crazy, it's only logical to assume the prices would go down with the decrease in fuel costs.This hasn't happened in the gas business either. The price per barrel is almost where it was when Bush took office, so why are we still seeing such high prices for gas. I filled up at $1,75 per gallon on Wednesday and on Saturday in the same station it was up to $1.99 per gallon. What gives?

jayhawklawrence 9 years, 1 month ago

A good news story. No political rock throwing. Just a story about plain ole fashioned greed.

I would like to see more of the same kind of stories.

Boston_Corbett 9 years, 1 month ago

Why doesn't the LJW do some grocery price comparison shopping as a service to its readers?

Oh, I forgot about the angry advertisers.

notajayhawk 9 years, 1 month ago

grammaddy (Anonymous) says…

"Somebody's making some extra cash here, at the consumer's expense."

No duh?

Why is it that, for some reason, so many people think the people that sell the products they buy are under some kind of obligation to sell things at cost? What the heck business are you in that you, or your employer, doesn't make a profit?

Like any other product (or service), food (and gasoline, grammaddy) is priced at what people are willing to pay for it.

WHY 9 years, 1 month ago

If you don't like the price don't buy the product. Maybe the LJW could get an economist on staff to help the c student journalists out.

deskboy04 9 years, 1 month ago

Just quit buying the things that are overpriced. I was in the store yesterday and one of my favorite canned soups was $1.44. I know that I was paying about a dollar per can a year ago. That's fine, no one makes me buy that product. I can purchase something else that isn't overpriced in my mind. It's called capitalism.

Maddy Griffin 9 years, 1 month ago

I didn't say anything about selling everything at cost. I have a problem with the "propping up of prices" and greed being the reason. Everyone should make some profit on what they sell or there would be no point in having a business. But to raise prices based on the cost of transporting those items and then see those transportation costs go down and not the price of said items... somethings not right and there's greed behind it.

HermioneElliott 9 years, 1 month ago

Organic fruit and vegetables are for elitists and faddy people that don't want to be confused with the masses. I don't see the point of an column about high prices unless there is something specific I can do.

stop buying corporate food. no buy bulk staples and fresh produce. no live on organic foods. no stop buying corporate food. no stop buying any fast food. no stop buying anything with msg. no

Good try, but no sale.

Chris Ogle 9 years, 1 month ago

hunt squirrels and catch fish... drink beer

mom_of_three 9 years, 1 month ago

I understand what grammaddy says...if the reason for the high prices of a few months ago was increased costs for transportation, due to high gas prices, then one would expect prices to go back down when the cost of transportation has gone back done. Since it has not, someone is making some money on the back of the consumer. Maybe the oil companies are behind it, sounds like what they do for gas prices.

Godot 9 years, 1 month ago

I agree with Ocean. Stop buying processed foods.

Something that should draw the attention of folks who are proponents of locally grown food and small farms, even personal gardens, is HR 875.

This is alarming. It would require permitting, testing and sampling of all food growing operations and would create a bureaucracy that runs parallel to FDA. It appears to be another power grab by corporate farming interests.

Bob Forer 9 years, 1 month ago

According to John McCain, the fundamentals of the economy are sound Yeah, right. Thank god they didn't get their way on privitizing social security. Had they, Bernie Madoff would have had enough money to continue his ponzi scheme, and the old folks he stepped over would be on their butts in the street. There is nothing more dangerous than republican greed. Lets hope it hasn't destroyed this great country. Why do repubs hate America so much.

gl0ck0wn3r 9 years, 1 month ago

Yes, we should applaud the markets for taking action agaist the bourgeoisie exploiters. However, the markets will be next as the people rise and eliminate class-based food warfare! When the proles are moved into the rural farm areas and land redistribution takes place, the proles will be able to eat all they want at the communal kitchens. Only then can we start the great leap forward.

Maddy Griffin 9 years, 1 month ago

Mom- of -3--Thanks for "getting" me. Larry the moocher- Seems to me that the right wingers convinced themselves that Obama was the Messiah,Could that be why they're all so mad that he's not walking on water. Democrats never said he could.

Commenting has been disabled for this item.