Greedy Corporations Are Keeping Food Prices Much Higher Than They Have To Be
Companies are keeping food prices elevated in order to maintain their cushy profit margins.
We have all heard the terms inflation, supply chain issues, and ingredient shortages that companies use to answer questions about why they have had to raise the prices of their products. According to some experts, corporations are raising food prices because they can and want to increase their company’s profitability because of the currently unstable economic climate. They know that after a while the consumer will grow to accept the price tag as standard for that item and no longer question whether it could or should be cheaper.
With food prices soaring, it is no secret that every household in America has seen its weekly grocery bill increase over the last couple of years. We don’t have to look further than the price of eggs in our local grocery store to see how food costs more today than it did a few years back. It’s reminiscent of conversations that we have had with our parents or grandparents when they would harken back to a time when consumer product X only cost a few cents or dollars and now it costs much more.
In the three years since the pandemic took our economy and forever changed how we shop and do business in general, academics are still trying to make sense of how those changes will impact it in the future. These effects appear in the prices of all consumer products but it is most obvious in the relentless ever-increasing food prices we have seen. Unlike a couch, a computer, or a vehicle, we can’t simply choose to hold off on purchasing those items until we can afford them.
Food, on the other hand, is a life necessity and we need to eat something every day so paying higher food prices is unavoidable. According to CNN Business, “between 2022 and 2023, groceries got 11.3% more expensive, for a variety of reasons.” When economists use the word inflation, many of us may not understand why it is occurring but the one thing we do know is that it results in higher prices for the products we utilize in our day-to-day lives.
This type of economic crisis is a once-a-generation type of problem that occurs and companies know this. CNN Business also quotes Jean-Pierre Dube, a marketing professor at the University of Chicago Booth School of Business saying, “Companies view these as occasional opportunities, and they don’t want to miss out.” We have heard all about the increase in transportation costs and supply chain issues that may have driven expenses higher for these companies, which are being used as excuses to keep things like food prices high.
What if your company didn’t see any actual impact from those areas and everyone else was raising prices, wouldn’t you do the same? Let’s just say, your company has experienced an increase in transportation costs but you also laid off some employees and reduced your human capital costs, which gave your company a positive gain for expenses on your balance sheet. You would still decide to increase food prices because you know consumers will lump it in with all the other price increases.
Doing so makes the company more profitable which in turn makes it attractive to investors. Those investors then gobble up your company’s stock which makes the company’s valuation skyrocket. That is the main purpose and goal of a corporation, so why wouldn’t they follow suit and take advantage of the current world economic climate for their benefit?
The answer is that they would and they do take advantage of these situations and unfortunately the consequences of those decisions are only paid for by the consumers of these products. The companies ultimately do not factor in what’s best for humanity when making these decisions. It is greed for more money and competition that drives these decisions in all companies. One of the true cons of a free market society is the eventual cost the population has to pay for that type of societal structure.
