There are a number of factors that effect the overall cost of items that we purchase–including “supply and demand” economics, the individual retail outlet or wholesaler at which you purchase the item(s), government subsidies (which have a substantial effect on the price of US agricultural products), and even drastic changes in weather.
Some examples of each are as follows:
One example of this would be the US government’s subsidization of powdered milk (generally cheaper than liquid milk)–not typically in high-demand and generally considered a staple of poorer consumers.
Powdered milk, though, is more costly to produce–it has the added step in its processing of being “dehydrated,” that is, it goes from regular milk to milk in powdered form.
The reason it’s less expensive goes back to a government subsidy initiated in the early Twentieth Century, when US farmers were severely effected by droughts throughout the United States’ “bread basket,” and there were also a number of US households that did not have refrigerators.
Powdered milk has been subsidized at 130% the cost of production (that is, producers receive a 30% profit on top of what it cost them to make it before it even leaves their storage facilities).
This is why that item is generally very cheap. It also is a commodity which the US exports regularly as “food aid” to poorer nations throughout the world, as it is shelf stable and not highly regarded in its own markets.
This type of dynamic also applies to (and therefore affects the price of) commodities ranging from beef to sugar beets and much more.
An example of “supply and demand” would be Coca-Cola, which doesn’t have any inherent value, per se, as a nutritional source–you won’t die if you don’t get your glass of Diet Coke ever again, for instance.
It has been marketed and been found to be sufficiently desirable that there is a certain demand for it, which effects the price as we see it on store shelves.
The Coca-Cola company essentially offers an “unnecessary” item at a cost that “the market will bear,” like Nike shoes charging $150 for a pair of shoes as long as there are people who are willing to buy them.
Lastly, severe weather changes can sometimes drive up the cost of a commodity–think Florida Oranges, etc–any time some catastrophe strikes which may wipe out a crop that would otherwise be abundantly available.
There are, of course, other factors, but these are some that have a relatively steady or substantial impact on the cost of food items that are purchased throughout the US and the world.
Other factors such as tariffs for imported items, luxury food items, and so on, are also a substantial part of the cost of a particular item, depending.
There are many different factors that go into determining the price of food. If the food is particularly difficult to grow or can only grow during specific seasons, that usually increases the cost. Also, if there’s a higher demand for a product, the price will generally be lowered in order to make more sales. Altogether it comes down to business reasons for why things are priced the way they are.
One major factor influencing the price of food is packaging and shipping costs. You can help reduce this cost by shopping at local stores and farmers’ markets. A lot of gas is saved by not having to truck in the food (thus helping the environment) and you can usually pick out exactly what you want in the amount that you need. Packaging is far less and you will find the food to be fresh and healthy.
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