ECON Corn Costs More, Why Not Corn Flakes?

[Nuthatch]

Great explanation of how food costs translate from farm to market.

Excerpt:

...."But the spike hasn't translated immediately or directly into an equal-sized jump in retail food prices. That's because the price of groceries is tied to many costs, such as packaging, marketing, labor and, most especially, transportation. The biggest single cost in a box of cereal is the cost of delivering it to the local grocery store, so the cost of gasoline is a bigger factor than corn in the retail price.".....

Link: http://www.npr.org/templates/story/story.php?storyId=130921775

 

[Army Girl]

They are still selling the corn flakes that were made from the cheap corn, it will show up when the manufacturer has to buy the higher priced corn.

 

[mikedonathan]

There is only a handful of corn in the box of flakes. The same with bread- very little grain in the loaf. What costs is handling and transportation.

 

[Gingergirl]

Guess we mostly eat "oil"...so oil prices should show up in the price of corn flakes real soon.

 

[momof23goats]

the boxes of corn flakes have got much smaller, and they do cost more.

 

[LtPiper]

Cereal boxes have been shrinking like crazy the last couple years so there's where they are making up the costs.

 

[Richard]

In the UK Kellogg's cornflakes and their other products are very expensive considering the raw materials used, I would never eat that brand or Nestles.

There are much cheaper and better alternatives.

 

[vessie]

I think Army Girl is right, the corn flakes you see on the ever emptying shelves have been in the 'pipeline' since when the corn was cheaper.

Richard, remembering that your in England, you got me remembering to seriously start hoarding HobNobs! Ooohhhh... V

 

[Nuthatch]

Please re-read the opening post---that is the point!

There is simply only a few cents worth of corn in a box of cereal. The rest is packaging, storing, transportation and marketing costs. So when transportation costs go up you will likely see more of a price jump than when only corn prices rise.

 

[big kumara]

Please re-read the opening post---that is the point!

There is simply only a few cents worth of corn in a box of cereal. The rest is packaging, storing, transportation and marketing costs. So when transportation costs go up you will likely see more of a price jump than when only corn prices rise.

Yep.

 

[bleep2u2]

Food companies use commodity contracts to hedge their costs. If prices rise the farmer gets the agreed lower price. If the price falls the farmer gets the agreed higher than market price. In this case rising market prices haven't affected food distributors yet. Wait till the next round of contracts for crops ! You will see big increases almost immediately.

 

[changed]

Corn futures