Higher Food Prices and Shrinking Food Packages
http://thedianerehmshow.org/shows/2011-03-30/higher-food-prices-and-shrinking-food-packages
Pasta, sugar and paper towels are arriving on store shelves in smaller packages. As the price of raw materials increases, producers are saving money by shrinking sizes. Passing higher commodity costs on to consumers and other marketing trends.
Guests
Catherine Rampell
economics reporter, New York Times
Bob Young
chief economist at the American Farm Bureau Federation
Scott Faber
vice president, the Grocery Manufacturers Association
Ben Popken
managing editor of consumerist.com
Rebecca Hamilton
associate professor of marketing at the Robert H. Smith School of Business, University of Maryland
Comments
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Dear Diane,
I cannot help but wonder if these shrinking food packages are partly in response to consumer demand. Smaller, more controlled portions are often of interest to the ever-evolving dieting market. For instance, in the yogurt aisle, the number of calories per container of yogurt seems to be an ongoing selling point to those watching their weight!
Thank you.
We are living in an unsustainable society. I guess the public won't realize this until they're walking out of the grocery store door with a $1,000 bill and half a grocery cart full of goods.
From Dick Welch, Malvern AR
The discussion of seller's cost ignores one fundamental characteristic of a free market system: his cost does not determine price; competition does.
From Dick Welch, Malvern AR
The discussion of seller's cost ignores one fundamental characteristic of a free market system: his cost does not determine price; competition does.
While I would rather have the size stay the same with the price higher, it is ultimately up to the consumer to be smart about what they purchase. Reading labels is not a new concept.
Little changes in federal and state laws allowed for state pension funds and other long term investors to become invested in commodities such that "the amount of money invested in commodity indices rose from $13 billion to $317 billion- a factor of 25 in a space of little less than 5 years" between 2003 and July 2008(M. Taibbi). Wall street pushed a tsunami of money into commodities, all of the prices have gone up. Packaging size decreases are simply strategies used by the corporations to lever as much from the consumers before they wise up that they are being tricked. Americans need to insist on closing the loophole allowing wall street and their speculators to affect the real prices we all pay for things we need every day. What ever happened to investing long term in federal and state bonds, which helped keep our states solvent?
It is important to look not only at the results but also at the process of caculation. It seems when the a business or government does not like the probable outcomes the method of calculating is jiggered to create a more acceptable outcome. You point out this is the case with the Consumer Price Index. It is also the case in calculating unemployment...certain unemployed portions of the potential work force are excluded, skewing the results. The multilayered tax code has the same effect. It is important to become an informed consumer and citizen!
I hate paying more for groceries, but the main reason for the high cost of foods is the cost of petroleum, used extensively in fertilizers. As prices for petroleum go up, so will our food prices.
Another important thing to know about using petroleum products on our food crops is that they are toxic to the environment, especially our water. There is a great website www.storyofstuff.com that really breaks it down!
I haven't noticed the increased cost / decreased packaging size at the Kroger store where I shop, because I'm spending more at the pharmacy located within the store.
Do I choose food, or do I choose my prescriptions?
Everything is going up in price, yet my income is not.
Mark - Little Rock
I almost feel sorry for the guy from the Grocery Manufacturers Association, because the smaller packaging is so indefensible.
But I'm sure he's well compensated for the job he chooses to do, even if it makes him come across like Martin Short's tobacco company executive in those old Saturday Night Live skits.
It seems to me the point is that a price increase is temporary and can be changed when product costs rise, e.g. gas, pesticides, weather problems, etc. When you change the size of the container you are saying the change is permanent. When the manufacturer has gone through the process of changing the container size, the packaging label, etc. they don't expect to change from a 7 oz. can to a 5 oz can then back to a 7 oz. can.
Obviously vending machine costs can't change and it is easier to change the size of the candy bar but that should be a separate process from changing the amount of cereal in a box.
Perhaps the product contents can be improved when originating costs fall, like less water in the product.
To the woman who complained about environmentalists wanting to change to solar - don't you realize that if we use less gas in cars you will have more access (and probably cheaper) gas? Also, how about standing up to those pesticide producers who want to have market monopolies?
Since about 1970 the United States, as a society, has been living beyond its means, running trade and current account deficits, and borrowing from foreign countries and governments to support a high living standard. The dollar has been over valued during most of this period, allowing us to import cheap energy and other items, with pervasive influences on our economy, politics and society.
The recent (and still current) financial crisis has changed all that. The US will have to begin to live within its means, and living standards on the whole will fall during a wrenching period of adjustment.
The topic of your program is just one example of the effort of American producers, consumers, state/local and federal governments, politicians, and the financial/insurance/real estate sectors to shift the costs of a lower standard of living to others. Other examples are pressures to reduce salaries and benefits for public employees and housing foreclosures. Get used to it: the process will dominate our nation for a long time to come.
What a BAFFLING program today. The topic (higher food prices and smaller packaging) begs the question: Are we asking the right questions - and are we concerned about the right problems - in the first place?
The problem with our food system is its shear size and the profit nature surrounding the constitution of what is "available." The woman (a farmer) who called in toward the end of the hour complained about environmentalists being "out of touch" with our food system and how we NEED OIL to grow/provide food for consumers. I believe she actually stated, "they just don't understand, the sun alone can't make our food." HA!This poor woman has been preached to by agribusinessmen about the necessities of growing food with petrol chemicals and has forgotten the delicate balance of sun, soil, season, biodiversity, and size.
Cities, counties, and neighborhoods should be growing their own food based on the ecology of their own region. Imports should be extremely limited. Food should be neither expensive nor difficult to acquire - but our hyper-Capitalist tendencies look to skim profits at any cost. Now they have farmers under the false belief that they NEED fertilizers to grow food. They are paid/subsidized to grow near-worthless foods like corn, soy, and wheat, while neglecting fruits/vegetables and perennial crops (because you can't make money on something that can't be depleted!) Rubbish! What they NEED is to better know their local growing conditions and their local community!
This program was SO difficult to listen to. The panel was so obviously brainwashed by their corporate/industrial talking points, and not one person mentioned the impending collapse of our food system and the necessity of relocalizing it.
Here is a short piece that we would all do well to read (especially farmers!):
http://www.hudson.org/files/documents/Berry_Solving_for_Pattern.pdf
Regarding big-box retailers requiring manufacturers to adjust quality in order to seel through them: A few years ago we shopped for a large Sony Bravia flat screen tv. We considered purchasing from Sam's Club, as we are members and their price was cheaper than Best Buy and similar retailers. We were well versed on the details of the Bravia. One well-informed sales person from Sam's Club responded to our question about why their Bravia's didn't have a particular feature the same apparent models did on line and at Best Buy. He explained that in order to sell at a cheaper rate, Sam's/Walmart has the asking power to require manufacturers to make the same models of tvs (and other products) in such a way that they can be priced substantially lower in the discount chain. We did not purchase the Sony Bravia from Sam's, but after today's show, I am sure the Honey Nut Cheerios we buy in large quanity there are not necessarily the same product I would buy at my local grocery store. Thanks as always from your wonderful programming!
RE: Higher Food Prices and Shrinking Food Packages
My instance was tuna fish, 3 Different brands Same Store, deception with weight, packing and product.
First: is 4.2 ounce can with water making up the difference in weight so it did not represent a difference in presentation.
Later I read the label.
Second: a can of albacore on the label but inside was 80% albacore. label read that 80% and legal to be so and say just albacore on the label.
Third: A can of solid white tuna on the label but the can was not at all. I Considered it to be 100% of the 20% of not solid white. Color and taste were very Bad. This one I do not buy any more and mention it to relatives and friends.
These are not due to cost changes but do reflect a lack of regulation ie weights and measures and truth in advertising the ethics in the business world disappear when not being watched.
Thank you
Being on a fixed income;social security and SSI, I have not had an increase for the last 2 years and wont get one next year.
If the super rich think of me as a human being they would wonder how I get along on under $700. a month. with the rise of food and other costs, it's not like my income has stayed the same, it's in reality, shrinking.
I wish all the polititians and the people who own them had to live like this for several months. I drive much less, eat less meat, don't eat out, don't go to movies, or buy new clothes or shoes.
I do look at the price per ounce when buying food.
I don't blame the farmers or grocery store owners, I blame the rich 2% who own the polititians. And the polititians who let themselves be bought.
Our class differences are greater than ever and the gap is widening rapidly.
I get food stamps, but they don't cover toilet paper,toothpaste, and those kind of things.
One other significant downside to the smaller packages is the increased packaging material used. My family doesn't eat less because the package contains less. I just have to buy and discard more packages. What a waste!
Has anyone thought of the demand for ever-increasing profits by the stockholders and officers of the corporations that feed us? I remember when starbucks changed the usual size of a 1 pound bag - formerly 16oz - to 12 oz....it's all been downhill from there....
Your guest made the comment that the producer does not want to pass the increase in cost on to the consumer as a reason for smaller package size. If a consumer needs a certain amount or servings of a produce the smaller size does not reducte the cost to the consumer but required them to purchase more at the higher cost to get the amount needed. his is just smoke and mirrors. Billie Phelps
The ultra-liberal/commie DR combine has done it again with the subject and content of this program. We can't even regulate and enforce the content of herbs/vitamins/etc, and now there should be regulations about changing the weight of packages? Good grief. Maybe in utopia there should be a video to watch at each product identifying changes for those interested, but how much of a change, and how long after the change should it be posted? AND you should pay for enforcement. We can't afford EVERYTHING! I noticed when my crackers went from 16 to 15 oz, but didn't stop buying. If you don't like the product or their marketing, then stop buying it - but shut up. I'll take responsibility for reading packages. You should too, or move back home and ask your mommie to do it for you.
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The callers who described how poorer-quality raisin bran and cider were being sold under well-known name-brand packaging in big-box stores put their fingers on a very serious problem. As food prices sky-rocket the quality of food and the quality of its processing is decreasing rapidly.
Big-box merchants tell us we can save money by buying name-brand products at their stores but they don't tell us that they have stipulated lower quality goods from these name-brand producers. Few consumers can afford to do the major comparative shopping required to find out where good qualitiy still exists.
Until recently we were told that inflation was remaining low BUT these reports did not take food prices into account. The increase in food costs is a serious problem.
Re smaller packages, we are an aging population. Households are getting smaller. For example, the big boxes of cereal I used to buy when the kids were home would go stale, now. Now that we've downsized our housing, smaller packages fit better in limited kitchen storage space.
Come on Diane - not a single mention of the main cause for these higher food prices; the Federal Reserve is dramatically increasing the money supply, and thus investors are protecting themselves by buying hard assets. You do your listeners a disservice by directing their anger at food manufacturers, who are just doing their best to play the hand the government is dealing them. Shame on you and shame on your "expert" guests that are blaming this phenomenon on "demand" from the developing world. That demand was always there; the difference now is that the Fed is flooding the world with new dollars, devaluing our wages and our purchasing power.
You really need to have an economist from the Austrian school on to inform your listeners about what is really going on - Prof. Joseph Salerno, Chair of the Economics Graduate Program at Pace University and James Grant, Noted commentator and publisher of Grant’s Interest Rate Observer, both testified before Congress on this matter, and would make excellent guests.
Once again, Diane's mock-interrogative diplomacy excuses her failure to get to connect the dots. Once again, the energy of the free-market is invested in deception and the "smart" punish the ignorant. Where is the social good in rewarding the food consumer's cleverness? Why is the clever consumer satisfied with the packaging "innovations" of life essentials?
The industry laughs at threats of boycott and ¡indignation!
Diane's show is another waste of energy and time - those few realizations it happens to ignite are far outweighed by the false consciousness it promotes.
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Its a small part on how they are trying to socialize our country. Slowly dumb down the middle class til their arnt any buy hitting their pockets.