General Mills Likes Cheap Sugar for Processed Foodstuff
Dan Haugen at MinnPost points out (via Reuters) that our local processed food manufacturer, General Mills, is concerned about the recent rise in sugar costs.
General Mills got huffy and suggested that the US may “virtually run out of sugar” which, as far as I can tell, means they’ll run out of sugar at the price they’re used to paying. That’s not exactly running out of sugar. For example, I could “virtually run out of fuel” if I arbitrarily decided that $2.00 per gallon was as much as I wanted to pay. There would still be plenty of fuel available, but I’d “virtually” run out.
Here’s the interesting part: Will rising sugar costs lead to rising prices in the middle aisles of the grocery store where you can find General Mills’ boxes of processed foods after passing by the unprocessed foods generally found along the perimeter of grocery stores? No:
In any event, analysts say, rising sugar costs are unlikely to boost prices of food products because prices for other ingredients such as grains have declined since last year.
Should we sympathize with the circumstance a locally run multinational company finds itself in, seeking discounts on raw materials used for production of processed foodstuff?
August 14th, 2009 at 8:30 am
The kind of excuses put forth by General Mills only serve as a publicized excuse to raise their prices due to the escalating costs of raw materials. What they are leaving out of their press release is that farmers, like my parents, who supply the grain for their products are making less today than they were in the early 1990s. The antiquated practice of growing 6% annually and raising prices that consumers pay the same each year just won’t fly in the current economy. Every time they raise prices, consumers seek out cheaper alternatives and the cycle continues, they have found a rather effective way to potentially make themselves obsolete.
August 14th, 2009 at 9:10 am
So the price of plain cheerios should be going down, that is great news for families suffering the the recession and rising health care woes caused in some part by over-processed and over-sugared breakfast cereals.
So general mills will take this opportunity to cut down the huge volume of processed sugars in the cereal line, that is great news.
Except, neither of these potentially good-for-society outcomes will be the result of this news, right? So really, what might be the outcome general mills is seeking here (funny, I was going to take a shortcut and type GM…funny how these american based multi-nationals seem so self-absorbed that they cannot do what might be good for the people–their customers–even in the face of circumstances that might prod them into corrective action).
Likely big G desire #1 – would be that they are setting the stage for some government bailout on the volume or pricing of sugar. But why, what happened to these ‘market’ types who are supposed to let good capitalism rule our world? I certainly hope our government representatives (and consumers) will see through this sad approach.
August 14th, 2009 at 9:51 am
Commodity markets originally designed to be used by farmers and buyers have been taken over by speculators who don’t take delivery of the commodity but just ‘buy low, sell high’. It started during the Bush I administration and continues today. Such as oil, natural gas. No connect between value and price.