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Food prices seem irrational. And I mean that - they are not reasonable. People buy bags of potato chips for almost $5.00. How much does the potato cost? It see

Food prices seem irrational. And I mean that - they are not reasonable. People buy bags of potato chips for almost $5.00. How much does the potato cost? It seems like the potato has nothing to do with the cost - especially if we reflect on the idea that "less than have of the produce ... makes a profit". What that means or appears to mean is that the cost of food goods is now driven by cost of production. And we may be underestimating that cost. Perhaps most cost of the potato cost is in the gas, fertilizer, equipment that go into growing the potato. My question is, of the $5.00 for a bag of potato chips, where does that money go? Cui bono?

sokoloff 3y ago
People buy hot water poured over roasted and ground up beans for $5+. People buy tap water in plastic bottles at a ballgame for $5+. I do not conclude from those facts that "that means or appears to mean is that the cost of food goods is now driven by cost of production". People are willing to pay for convenience and comfort. A bag of chips, a cup of Starbucks, or a bottle of cold water at a ballgame represents comfort and convenience.
Tycho 3y ago
Food is the one thing on which the average citizen regularly spends 10x or even 100x more than they need to spend.
ilyt 3y ago
The making of a potato is subsidized from taxes so it can be sold for "cheap". There is no subsidies for making chips, and it is "a treat" so there is not all that much reason to make it cheap aside from competition
- carlosjobim 3y ago
  > There is no subsidies for making chips Except for the subsidies for growing the potato.
  - ilyt 3y ago
    I mentioned it in other comment but yes, subsidies essentially make it cheap not only to consumers but to processed food companies so they can make good margin on it as raw resources are essentially free compared to price of the product.
SL61 3y ago
Chips, along with cereal, are an interesting case where the normal price is crazy high but then they go on sale for a fraction of that with extreme frequency. There's a store near me that has had a particular $5 chip brand on sale for $2 for well over a year. For cereal, I just go to the cereal aisle and take my pick from the substantial range of cereals that are 50% off at any given time. You're only paying full price if you're picky and insist on one specific item, which to be fair maybe a lot of people are like that. I'm sure the sales are loss leaders to get people in the store, but I have to wonder if the people who pay $5 are to some extent subsidizing the people who buy them for $2. Most other categories of goods don't seem to go on sale with such frequency or with such deep discounts.
Turing_Machine 3y ago
A 350 gram bag of potato chips takes up almost as much shipping volume as a 2 kg bag of potatoes, and needs much more cautious handling during shipping. There are also lots of energy costs involved in deep frying (both the oil and the heat), special packaging to keep the chips from going stale, etc.

sokoloff 3y ago

People buy hot water poured over roasted and ground up beans for $5+. People buy tap water in plastic bottles at a ballgame for $5+. I do not conclude from those facts that "that means or appears to mean is that the cost of food goods is now driven by cost of production". People are willing to pay for convenience and comfort. A bag of chips, a cup of Starbucks, or a bottle of cold water at a ballgame represents comfort and convenience.

Tycho 3y ago

Food is the one thing on which the average citizen regularly spends 10x or even 100x more than they need to spend.

ilyt 3y ago

The making of a potato is subsidized from taxes so it can be sold for "cheap". There is no subsidies for making chips, and it is "a treat" so there is not all that much reason to make it cheap aside from competition

carlosjobim 3y ago
> There is no subsidies for making chips Except for the subsidies for growing the potato.
- ilyt 3y ago
  I mentioned it in other comment but yes, subsidies essentially make it cheap not only to consumers but to processed food companies so they can make good margin on it as raw resources are essentially free compared to price of the product.

SL61 3y ago

Chips, along with cereal, are an interesting case where the normal price is crazy high but then they go on sale for a fraction of that with extreme frequency. There's a store near me that has had a particular $5 chip brand on sale for $2 for well over a year. For cereal, I just go to the cereal aisle and take my pick from the substantial range of cereals that are 50% off at any given time. You're only paying full price if you're picky and insist on one specific item, which to be fair maybe a lot of people are like that. I'm sure the sales are loss leaders to get people in the store, but I have to wonder if the people who pay $5 are to some extent subsidizing the people who buy them for $2. Most other categories of goods don't seem to go on sale with such frequency or with such deep discounts.

Turing_Machine 3y ago

A 350 gram bag of potato chips takes up almost as much shipping volume as a 2 kg bag of potatoes, and needs much more cautious handling during shipping. There are also lots of energy costs involved in deep frying (both the oil and the heat), special packaging to keep the chips from going stale, etc.