4 ms·

How is it damning if it's gross profits? If eggs get 5x more expensive, and you sell the same amount of eggs, shockingly, you will now have 5x gross profits, no

How is it damning if it's gross profits? If eggs get 5x more expensive, and you sell the same amount of eggs, shockingly, you will now have 5x gross profits, no?

GalenErso 4y ago
Most elite HN CPA.
lostlogin 4y ago
The profit margin isn’t that insane relative to other industries. “egregious profits reaching as high as 40%” (from the article).
quickthrowman 4y ago
You’re assuming that producing an egg costs 5x more in 2022 than 2021. I can’t think of any input cost increase that could account for a 5x production cost. A hatchery takes in chicken feed and spits out eggs (and macerated male chick slurry), it’s a pretty simple business.
- calvinmorrison 4y ago
  A lot of chickens died for those eggs you ungrateful consumer
- deleted 4y ago
  [deleted]
- flextheruler 4y ago
  Chicken food comes from corn, wheat, oats, some fish. It’s delivered by truck. The cost of fertilizer is at record highs. The cost of fuel has increased. I’m not justifying the exact increases but supply chains are never simple, especially in the modern economy.
voisin 4y ago
Eggs don’t just get 5x more expensive on their own. Competition should keep gross margins in a mean-reverting band over periods of time.
- johngladtj 4y ago
  You're right, sometimes a bird flu kills off a lot of egg producing hens, which results in less eggs around
  - azinman2 4y ago
    Except the article pointed to a previous outbreak where prices didn’t go up as much.
clint 4y ago
Eggs would, presumably, get 5x expensive because the cost to produce the eggs cost has gone up 5x. However, it obviously has not if there are record-setting profits. More than likely the cost to produce an egg has only gone up 1.4x and the greedy corporations have raised prices 5x and stoked a media narrative that costs have increased 5x.
- HDThoreaun 4y ago
  No, they presumably got 5x more expensive because half the flock died. If taiwan was invaded and TSMC's factories destroyed chip prices would skyrocket too, not because Intel and Samsung's costs have increased, but because there are more people competing for their limited supply of fabs. The alternative is everyone who used to use TSMC chips being shit out of luck and having to close up shop until new fabs can open.
  - mrtranscendence 4y ago
    If fab supplies are limited, some people will be SOL anyway even if prices rise. It's not like higher prices are magical and mean that everyone who needs something will get it. It's just that those who do buy at inflated prices will get reamed.
    - HDThoreaun 4y ago
      > It's not like higher prices are magical and mean that everyone who needs something will get it. That's exactly what it means... If you create a product that adds enough value that people still want it with the high prices you'll be able to afford space at the remaining fabs. Low value add products will stop being produced until supply catches up. Yes, the TSMC customers will displace some of Intels/Samsungs, but the most important products will continue to be made.

How is it damning if it's gross profits? If eggs get 5x more expensive, and you sell the same amount of eggs, shockingly, you will now have 5x gross profits, no?

GalenErso 4y ago

Most elite HN CPA.

lostlogin 4y ago

The profit margin isn’t that insane relative to other industries. “egregious profits reaching as high as 40%” (from the article).

quickthrowman 4y ago

You’re assuming that producing an egg costs 5x more in 2022 than 2021. I can’t think of any input cost increase that could account for a 5x production cost. A hatchery takes in chicken feed and spits out eggs (and macerated male chick slurry), it’s a pretty simple business.

calvinmorrison 4y ago
A lot of chickens died for those eggs you ungrateful consumer
deleted 4y ago
[deleted]
flextheruler 4y ago
Chicken food comes from corn, wheat, oats, some fish. It’s delivered by truck. The cost of fertilizer is at record highs. The cost of fuel has increased. I’m not justifying the exact increases but supply chains are never simple, especially in the modern economy.

voisin 4y ago

Eggs don’t just get 5x more expensive on their own. Competition should keep gross margins in a mean-reverting band over periods of time.

johngladtj 4y ago
You're right, sometimes a bird flu kills off a lot of egg producing hens, which results in less eggs around
- azinman2 4y ago
  Except the article pointed to a previous outbreak where prices didn’t go up as much.

clint 4y ago

Eggs would, presumably, get 5x expensive because the cost to produce the eggs cost has gone up 5x. However, it obviously has not if there are record-setting profits. More than likely the cost to produce an egg has only gone up 1.4x and the greedy corporations have raised prices 5x and stoked a media narrative that costs have increased 5x.

HDThoreaun 4y ago
No, they presumably got 5x more expensive because half the flock died. If taiwan was invaded and TSMC's factories destroyed chip prices would skyrocket too, not because Intel and Samsung's costs have increased, but because there are more people competing for their limited supply of fabs. The alternative is everyone who used to use TSMC chips being shit out of luck and having to close up shop until new fabs can open.
- mrtranscendence 4y ago
  If fab supplies are limited, some people will be SOL anyway even if prices rise. It's not like higher prices are magical and mean that everyone who needs something will get it. It's just that those who do buy at inflated prices will get reamed.
  - HDThoreaun 4y ago
    > It's not like higher prices are magical and mean that everyone who needs something will get it. That's exactly what it means... If you create a product that adds enough value that people still want it with the high prices you'll be able to afford space at the remaining fabs. Low value add products will stop being produced until supply catches up. Yes, the TSMC customers will displace some of Intels/Samsungs, but the most important products will continue to be made.