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Value for money?


I got a shock when reading a post titled "Conversations with a Nebraska farmer" at Eaton Rapids Joe's blog the other day.  The last few paragraphs caught my attention.

He said a 14 ounce package of Doritos has about 5 cents of corn in it when corn is $4 a bushel. That package of Doritos went up $2.50 when the cost of the corn went up to ten cents per package.

It is highly probably that the cost of the multi-color, metalized, mylar package the Doritos are sold in cost Frito-Lay more than twice what they paid for the corn. Furthermore, the advertising probably cost twice as much as the corn and the package combined.

It isn't the farmer who is raising prices.

An anonymous commenter then explained:

Yeah, but Frito-lay is doing their best by making the package half the size of the one last year, and charging the same price. Just trying to help out the consumer, by minimizing the mylar.

There's more at the link.

A 14.5-ounce pack of Doritos is what the brand calls its "party pack" - the biggest they make.  I'd never correlated the size of the chip packet with the amount of actual grain involved in making the chips inside.  To learn that it's only a few cents' worth of corn is an eye-opener.

Just extrapolating from Eaton Rapids Joe's figures without worrying about price changes, that means a $4 bushel of corn would have produced about 80 14.5-ounce bags of Doritos, which at current retail prices would cost $4.98 each at Walmart, for a total revenue at retail level of $398.40.  At $4 per bushel, the farmer would have received approximately 1% of that amount for the corn in that packet;  at $8 per bushel, he'd have received about 2% of it.  That says a bundle about how much profit the manufacturer and retailer are making.

Makes you think, doesn't it?


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