The price of a bag of coconut-cashew granola at Whole Foods jumped last year from $5.99 to $6.69. Why that happened defies simple explanation.
The granola maker, Wildway Foods, said the cost of making the cereal hasn’t gone up that much, and that it isn’t pocketing more profit. It jacked up the price, it said, in large part to offset fees that piled up from a little-known link in the supply chain: grocery distributors. There were charges for processing grocery promotions, others for potential spoilage and still more related to alleged shipping glitches.
Rising prices, especially in the supermarket, have vexed consumers, drawn scrutiny from regulators and emerged as a central issue in the presidential race. Donald Trump has blamed Kamala Harris and the Biden administration, and Harris has pointed a finger at grocery chains and food companies.
George Milton, who runs a hot sauce business in Austin, Texas, said consumers are frustrated because it isn’t clear to them why many food prices are so high. “Is that price gouging or costs going up for distributors or retailers or farmers? I have no idea,” he said. “Nobody does.”
Big food companies have increased prices in recent […]
This is an illustration of the power of rent seeking behaviors in the US economy. Companies who have inserted themselves into the supply chain and who add some value but due to their position are able to extract far more in profit than they add in value. Pharmacy benefit managers are another example of the phenomena. It is the complexity of the system which permits the obscurity of the process. Simplify the process, reduce the supply chains and more rationality will enter the system. For all the whoola about globalization the results allow for what you are reading. Want peaches, strawberries, and other perishables 12 months out of the year on demand? This is cost.