Can anyone out there explain the impact of this? Am I exaggerating the potential effects? Potato Famine anyone?
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16 hours ago
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The corn that eventually makes its way into your Coke wasn't picked yesterday. The corn goes through a lot of processing to become syrup, I imagine that syrup sits warehoused somewhere for a while, then it's turned into delicious soda, which also probably sits somewhere for a while before being shipped to your grocer, where an individual bottle may remain on the shelf for days or weeks before being sold. Likewise, those doritos weren't picked yesterday.
ReplyDeleteBecause it takes so long for many corn-based products to go from the farm to your table, you won't see a sharp rise in their prices. You may see no rise at all for products that are overproduced, resulting in lots of small stockpiles all over the place (just look at how much shelf space Coke takes up, and then imagine what the stockpile in the store room looks like...and then the stockpile at the distributor). But, for other products, the producers are aware of how price sensitive consumers are, so instead of a sharp, temporary rise, what you're more likely to see is a very small increase in prices, spreading out the cost over months or longer.
Where prices are likely to go up are areas where the food goes straight from farm to store, such as fresh corn or beef. These products don't have a long manufacturing chain or stockpiles that can absorb the price increase, and you may see something similar to the spike in avocado prices a couple years ago.
But, no revolt is coming. The people who will be hardest hit by price increases (aka: poor people) are also the least likely to buy the affected products. They're more likely to buy canned corn, which may have been harvested a year ago, than fresh corn, and more likely to buy a McDouble (which won't go over $1) than raw ground beef.
The aforementioned poor people that BL1Y talked about are also the least likely to starve in this situation because they tend to be the sole beneficiary of socialistic handouts from the pandering US government.
ReplyDeleteThe rich and the poor do not get screwed in this country. Only the middle class does.
Why are you counting yourself out of the 'poor' category, BL? Last I checked, the homeless man on the street corner has a higher net worth than you do? Fair?
ReplyDeleteI never said where I counted myself. And while the homeless man has a higher net value, I have a higher cash flow and much higher standard of living.
ReplyDeleteBL1Y displays a shocking ignorance of commodity markets.
ReplyDeleteSure, I know shit about commodity markets, because that's not where I buy my food. I do however know a good bit about Publix, McDonald's and Chipotle.
ReplyDeleteA couple years ago there was a shortage of avocados and the price for them jumped way up to the point where some Chipotles stopped offering guacamole, or else a higher amount for it. Why? Because avocados go straight from the farm to Chipotle, they use fresh ingredients, and so if prices go up this month, they don't have a stockpile to dig in to until prices come back down.
On the other hand, if the price of beef went up 10% for a month, do you know what'd happen to the cost of a McDouble? Absofuckinglutely nothing. Micky D's would stop buying beef until they had depleted their stores of frozen patties, hoping that the price comes back down before they run out. And, if they're forced to buy more expensive beef, you won't see prices adjusting to it right away. Instead, you'll see the prices change over a 5 year period because they don't want to piss the customers off.
Do you think a few years from now when you go to a bar and order a Jack and Coke the bar tender is going to say they have to charge an extra 50 cents because it was made from the more expensive corn JD bought during a corn shortage? Of course not. The longer the time between buying the raw product and distributing the goods to consumers, the easier it is to spread out cost increases over time instead of passing on a large but temporary increase.
BL1Y is right on this. Besides, the U.S. produces so much corn, a 4% drop isn't anything that would affect prices too much. And even if it did, the secondary food market is so competitive, no food producer on their meds is going to raise prices.
ReplyDeleteFor that matter, the U.S. could benefit from curing its addiction to corn-based products, so it's not like it's even that bad of a situation to be in.