General Mills to raise cereal prices

I lied. It would appear more of our (American) breakfast aisle is going up in price. I think Business Week captured the issue as neatly as one could imagine – and all in the first paragraph!

General Mills Inc. said on Tuesday it would raise cereal prices to match increases by competitors, but investors sent its shares down more than 3 percent, and one analyst downgraded the stock.

(I define ‘paragraph’ loosely). The squeeze then is put on families who eat this stuff in the morning, all in the name of ‘margins’ – yet it still won’t do any good if those margins are going down. If you’ve any sense, drop General Mills, Inc. and buy stocks in corn and guns. I still say to buy gold, but I’m pessimistic like that.

The interesting thing from the perspective of bringing one’s ‘goods’ (I’ll return to this in a second) to market is that General Mills isn’t merely following the market (e.g. Kellog Co.) in price movements, but packaging also. They discovered a very clever way to hide the appearance – on paper – of their price hikes:

General Mills spokesman Tom Forsythe said customers should actually see lower prices per box, but the boxes will be smaller, so the effect is a price increase of a few percent.

General Mills, see, has had larger box-sizes than the competition, so they can gamble, quite reasonably, on laden-cart-pushing parents not catching on too well that the boxes aren’t as big as they used to be. Of course they’ll soon figure out they don’t last as long as they used to, though, and the whole plan might just backfire – another incarnation of the mythical 7% rule? Who knows.

However, General Mills is also gambling that a box of their cereal lasting longer isn’t a big deal for ordinary harried parents who might not be too quick on shopping according to the price-per-ounce section of the label (non-Americans: supermarkets have prices-per-ounce, as well as the price for the item in question, for food. The price-per-ounce is smaller (meaning the font size on the shelf-label is smaller), though. Brits will already be familiar with this, and more, and I wasn’t paying attention the last time I was back in Australia, so who knows what’s happening down there).

After all, another (literally, in my course) textbook example of elasticity uses breakfast – specifically that family breakfast cereals in toto are relatively price-inelastic (meaning General Mills has little to risk by following the market upwards in price) because there are few substitutes. However there are substitutes for mere Cheerios, or whatever-the-hell-else-kids-eat-these-days (I just paid about 9 bucks in an import store for a box of Weetabix minis, so I may not be the best at this anyway), and if it was not-having-to-buy-as-often that these parents were using as the signal of value in General Mills products, there could be trouble ahead.

The company is also planning on culling some sizes altogether – and if parents see those go missing from the shelves it may add to the notion that the company is getting unkind to families trying to pump their shit into their kids during trying times.

And why? That we already know: the price of energy and – alley oop – corn.

I need to go off and learn whether the fact that in my local supermarket in Bethlehem, PA, I can’t find a single goddamn box of cereal (including the muesli) that doesn’t contain high fructose corn syrup is a factor, or whether it is just the basic corn that everything (including dodgy types of food for my turtle) seems to use as hamburger-helper these days.

Does it matter? Not really. The damage high fructose corn syrup is doing to our kids isn’t the issue here, the price of day-to-day groceries is (here is another interesting point for debate. Family breakfast cereals are hardly necessities, but can the Wonder Years generation, raised on suburbs, two-car garages and shiny supermarkets break the habit and return to basic wheat-and-a-spoonful-of-sugar breakfasts?). I think most people are still in a mindset wherein increasing utility bills will be seen as too much. I honestly don’t think ‘people’ are mentally prepared for losing actual capacity to buy what they had considered last week to be perfectly ordinary groceries. I see some wide avenues for pandering by Presidential candidates ahead…

Finally, did you think the problem stopped at something as easily identified as breakfast cereal? No chance. Not under the US FDA, are you crazy?

Near record high prices for corn mean that farmers are feeding their pigs “people food” according to an article in The Wall Street Journal. With demand for ethanol booming, American farmers are facing a dilemma when it comes to feeding their livestock. The Wall Street Journal reports that some farmers are increasingly relying on food waste to feed their animals.”Besides trail mix, pigs and cattle are downing cookies, licorice, cheese curls, candy bars, french fries, frosted wheat cereal and peanut-butter cups. Some farmers mix chocolate powder with cereal and feed it to baby pigs,” writes Lauren Etter.

“California farmers are feeding farm animals grape-skins from vineyards and lemon-pulp from citrus groves. Cattle ranchers in spud-rich Idaho are buying truckloads of uncooked french fries, Tater Tots and hash browns.”

“In Pennsylvania, farmers are turning to candy bars and snack foods because of the many food manufacturers nearby. Hershey Co. sells farmers waste cocoa and the trimmings from wafers that go into its Kit Kat bars. At Nissin Foods, maker of Top Ramen and Cup Noodles, farmers drive to a Lancaster, Pa., factory and load up on scraps of the squiggly dried noodles, which pile up in bins beneath the assembly line,” she continues.

And that’s just to keep meat cheap enough for you to be willing to buy it at the supermarket. Where you are legally incapable of finding out where that round mound of meat came from, what it ate and how it died (unlike in Europe, where supermarkets are legally obliged to let you find these things out – a colleague of mine had an interesting perspective on that, which we can discuss another time). Me, I’m ever more glad that I’m vegan.

Holding pattern

Still working on working papers and stitching together a post for tomorrow on Propensity Score Matching…stay tuned…

My Brown-skin baby they take him away

Apropos of nothing – possibly the government’s policy/attitudes toward indigenous people being – rightly - labelled assimilationist by former Family Court chief justice Elizabeth Evatt.

I give* you Bob Randall’s masterpiece, My Brown-skin Baby.

UPDATE: the .mp3 file is gone, now. Email me if you want it (my email address can be found on my staff page, here)

Also Ted Egan – master songwriter, poet and storyteller, and whose work you really ought to support – and a poem by Bruce Simpson, Assimilation.

Finally, a very fine (and, by me, very favoured) poem by actress, writer, teacher, artist and campaigner for Aboriginal rights, Oodgeroo Noonuccal, My People:

No more woomera, no more boomerang,
No more playabout, no more the old ways.
Children of nature we were then,
No clocks hurrying crowds to toil.
Now I am civilized and work in the white way,
Now I have dress, now I have shoes:
‘Isn’t she lucky to have a good job!’
Better when I had only a dillybag.
Better when I had nothing but happiness.

You can find more of Oodgeroo’s poetry here and here.

*”give” not actually defined according to the meaning of give. You can keep this on your harddrive for 30 days, then you must delete it, buy 100 copies of the album and send the RIAA a cheque for a hundred gazillion golden dubloons.

Well you can’t grow any grain if you ain’t got any rain/Everything except my mortgage blown away

It looks like Costello is taking some reins, there.

The first thing of interest is, again, broadband. Specifically,

“We want to see a situation where a fibre-to-the-node (network) is built (and) built quickly,” Mr Costello said today. “And built on terms which make it affordable to consumers.”

I suppose I’d call myself a Social Technocrat (and why not? It’s meaningless), but this is high-speed internet access. I confess to discomfort that the Treasurer, nee next Prime Minister, refers to consumers, when I would rather he considered the constituency of broadband internet, say, citizens. Yes, I think telecommunications is that important. It shouldn’t be denied to high school students who can’t afford $50 per month. The silly dot-com boom managed to advance fibre-optics wonderfully, and Lord knows our neighbours are taking every advantage of it. Why weren’t/aren’t we? Sure, we have the landmass of Europe and the population of Taiwan. But we have a Treasurer who just handed down his 10th consecutive budget surplus, and not a bad one at that. If he wants to win an election, why not just build the FTTN network and give it out cheap? You can always privatise it later and make the money back, right?

I’ll leave for another time the dicussion of whether the surplus is his, whether he was just around when it occurred, or where he should stand between the two.

The second interesting issue is his insistence that the roll-out won’t take long, and that the government has two consortiums already, each promising not to need any public money. He also said the ACCC wasn’t going to be sidelined. Quite a lot, for a man who is neither Prime nor Communications Minister. It also will come as news to Burgess.

Bear in mind, of course, that this is not government, this is politics. At election time. The most you should expect to receive with these people is a free grain of salt. Maybe. I don’t know where Costello stands on core promises. Even a casual reading of Monbiot though should make one uncomfortable at private infrastructure enterprises that start out with low bids, high praise and big promises.

Finally, I’m not comforted by a government (or just a Treasurer?) insisting that roll-out can be done quickly when they/he have yet to pick a provider – not a judgement I’d want my government to rush. We’re talking about the same people who can’t even make good decisions slowly, after all (although I think the Collins class submarines have stopped being utter shit, now).

On to the point of the Seeger lyrics. The Treasurer has also been talking about something more his line:

Mr Costello also said the price of goods and services such as electricity and petrol will have to rise under a carbon emissions trading scheme.

Actually he didn’t quite explain why. The Australian Government refuses to put up any targets for emission reductions, but the Treasurer tells us that

“If we move to a trading system which is designed to make coal fired power stations less attractive, the electricity that comes from coal fired power stations will become more expensive. There is no such thing as a “cost free” reduction in carbon emissions, he said. “I think it’s a better response than a legislated reduction or a legislated tax, which are other responses,” he said.

He said, he said (I told you the SMH isn’t very good). This doesn’t sound much like the Economics with which I’m familiar, but then it’s a newspaper, not a textbook. What is noteworthy is that the government seems on-board with the idea of being a toxicity purchaser, rather than seller (see my previous post about who buys emissions permissions and who sells them). Shame. But at least he’s warning us that coal is going to become expensive. Which I’m sure is in no way related to the nuclear question (curse my cynical heart!).

Now, we see a theme emerging. The Treasurer also spoke about our recent trade figures (fair’s fair – he is the Treasurer):

“We’re in the worst drought in 100 years and we’re not exporting much in agricultural commodities,” Mr Costello said today.”

Secondly we know during the March quarter that cyclones hit the West Australian coast and affected some of the big mineral exporters and you can’t do much about cyclones.

“We also know that there are in other industry bottlenecks, which are holding back Australian exports and the biggest of course is our coal industry at Dalrymple Bay.”

For the 2IC of a party that makes decent sport of Keating’s recession we had to have, that’s a fair amount of complaining/explaining. And I can’t see those agricultural problems getting any better (tip for our farmer’s: it doesn’t rain any more. Get out while you still can.)