Potatoes move by rail much in the same way that grain does to reqional processors. For instance Frito Lay is a major customer on the SUZYQ to Conklin NY. I am paying 4.75 or even more for a bag of chip. Beer is still pretty cheap but even Budwiser can be out of my price range. Been drinking Gennese Beer. 5.50 for a can of Bud on Amtrak is enough to make me brown bag it next time I take the train. I know that grain prices are set by futures contacts but perhaps the potato guys have to wait behind the grain guys when it comes to rail cars for potato meal.
The Organization of Potato Exporting Countries (OPEC) cited unrest in potato producing countries and possible Iranian blockade of potato ports in Maine as reasons behind the high cost of crude potato’s. China has also been accused of forcing the cost of a BAP (Bushel and a Peck) upward due to investment speculators on the world market.
Simply put, America needs to remove itself from the world market and increase domestic potato farming.
Norfolk Southern contributes to the problem as train crews are forced to increase the number of snacks taken on the job to hold the grumbellies over while sitting dead in the water during melt downs. As the demand for potato chips increase the OPEC nations may not be able to sufficiently support it.
Possibly, If New York State would allow for fracking of vegetable oil, it would bring the price down? And if They( da’ State Goberment) would quit pushing rails-to-trails there… Frito-Lay could bring in potatoes, in bigger lots than a haversack full? [|(]
Potatoes are about $.50/lb. Chips are $4/lb. Check how much shelf space Walmart allocates for chips and you will know how much profit they make. Old Dutch is a local company and we try to buy something that Frito-Lay doesn’t make.
ndbprr: You are very correct. If they can sell a bag for $4.75 without loosing enough sales to offset any price increase, they’ll do it. And they should. That’s the most efficient way to price potato chips (or about anything else.)
You understand more about economics than say, about 95% of the population.
Let’s understand that you are not just paying for the potato chip; you are paying also for the packaging. The packaging is manufactured by someone else and has to be shipped to the potato chip company. Potato chip company employees that have nothing to do with the manufacture of potato chips are still needed to run the machines that package them while other employees take the finished potato chips to the warehouse. They are then loaded into trucks for shipment nation wide. It is a long process to get your potato chip to your local 7-11. The cost of packaging and shipping adds much to the cost of any manufactured food product; oftentimes more than the actual cost for the production of the potato chip itself.
tree68 posted "Hence the phrase “what the market will bear…” ".
Actually, I believe that phrase started with a railroad rate guy as “what the traffic will bear . . .”.
Don’t forget that potato chips probably load pretty ‘light’ - i.e., they ‘cube out’ in filling a trailer, container, or boxcar before they ‘weigh out’ (unless they’re stacked tightly like the Pringles brand). So the inability to carry more in each load and hence spread out the transport costs adds to the cost of those that can be carried . . . [:-,]
There’s a very large Lay’s facility west of Casa Grande, Arizona, that receives corn oil and other ingredients by rail, but as near as I know all chips leave in trucks because they don’t go far enough away for rail travel.