So when prices for commodities are down, they just suck up that difference as additional profit margin. But their margins get hurt when the commodity prices go up.
That's true, Ron, but the cost of the grain is so small that even if it tripled it wouldn't make much difference in the bottom line; if the cost of oats doubled, it might raise the actual cost of a box of Cheerios by a penny. The thing to watch for is when the commodity prices increase, the retail price will likely jump far beyond what it should.
You are absolutely right about the likely impact on beef and pork. As the smaller producers are driven out of business, the intermediaries of the business (transport, slaughter, packing, retail butcher) will suffer little or no impact.
As you say, like gold. When a small mine closes down, who else in the gold retail chain (no pun intended) gets hurt? Sad thing, and a loss of a way of life for many, but that's the Wal-Mart way of life today.
jim |
