Saturday, November 26, 2011

No Bull - Facts About Retail in the US

For those fantasizing about the benefits of big retail, here is some data:
Product Retail Price Farmer's Share
Flour (5lb) $2.89 $0.62
Bread (1 lb. loaf) $2.99 $0.12
Cereal (18 oz.) $4.39 $0.09
Potato (Russet 10 lb.) $3.99 $0.77
Soda (2 liter cola) $1.49 $0.07
Lettuce (1 head) $1.99 $0.44
Fresh Carrots (2 lbs.) $2.99 $0.76
Milk (1 gal. fat free) $3.75 $1.27
*Farmer’s share derived from USDA, NASS ”Agricultural Prices,” 2008. Retail based on Safeway (SE) brand except where noted.

The farmer's share is down 3.2 cents from just last year, and is a long fall from the 40 cents for every food dollar that farmers received in 1950. Wake up and smell the facts. A US style food industry is the last thing India needs.


Arvind said...

India does not permit beef. So your example is wrong. If you want us to look past this and focus on the numbers, so what? Are you driven by envy of what others earn?

Taking your arguments to another industry, we see that the ratio of the wealth of Bill Gates to that of a programmer is more than 50,000. Should we ban technology sector in India? This is what envy and anger does.

Inferno said...

I realized that beef is not the best candidate for comparison. Please note the change above to more relevant data. We were told repeatedly about how "Indian farmers get only 15% of the retail price whereas in developed countries farmers get 67% of retail price". Rubbish. You want data? Let us talk data. I refuse to be handed a bill of goods.

(Please don't malign Bill Gates. He is a techie and a real businessman. Not a professional speculator).

nutwit said...


What abt Walmart flooding cheap Chinki made goods in India ala USA?
Here is an article by Gurumurthy, Any comments?

M. Patil said...

Actually, the above data is from Safeway, which is considered an Angel compared to Walmart. Walmart numbers are far worse. People who advocate for big box retailers must show some evidence rather than indulge in false analogies and rhetoric.

"Big box retailers especially Walmart squeeze suppliers bone dry. In US the suppliers could not meet Walmarts procurement prices without shipping their manufacturing to countries like China. Doing so enabled China to master manufacturing know how and expertise. This massive transfer of technology helped China become the manufacturing powerhouse and also a net exporter. US has become a debtor nation from a creditor nation. Having the worlds reserve currency Dollar, helps US at least in short run. Can India afford to import manufactured goods at the expense of local manufacturing? India with its weak laws and without anti dumping or anti trust laws is going to be a free for all. As it is India's oil import bill in 2010 was nearly 76 billion dollars, can we afford to import more stuff that can be made here?"

Arvind said...

You have not answered my question "so what?"

If you feel the prices are too high, you have the option of directly buying from the farmer. Instead, you insist that someone else go to the farmer, purchase the food item for you, process it and package it and transport it for you and store it until you purchase it. What is more, you do not guarantee that you will purchase the item!

Next, in a bizarre turn of events, you tell the government, "Please Rahul Nehru and Manmoron Singh, protect me by robbing me of my wealth and fattening yourself and preventing others from bringing food to my neighborhood store from the farmer. Also, do not allow a neighborhood store!"

Makes no sense to me. If the margin is so great, there *is* a mechanism by which it can be brought down. *YOU*, and I mean *you* personally, start a competing business and bring down the prices.

In a market economy, action is highly valued. Words are useless. All the links you pull up are based on useless "research" that cost taxpayer money. Yet, you seem to be okay with this robbery.

The high prices are legitimate no matter how you spin it. We do not need envy based systems like socialism and Communism in India.

Inferno said...

It is not the trader against me, as you interpret it. It is about big traders and small traders. About those who can sustain losses till the small traders go out of business. It is a about manipulative practices and predatory pricing. About dismantling a system of Indian trade that existed for ages.

But all this is not the intent of this post -- all that this post is meant to do is expose some scholarly lies that are repeated till everyone believes them.

The farmer's share of the retail dollar is a real number. You can try your best to deviate from the discussion but you cannot hide from it. Try as you may. It takes honesty to accept this. It is a Real Number.

Arvind said...

Indian trade is an oxymoron. It was just a shortage based economy until the early 1990s. Life was a struggle.

To nutwit: If Chinese sell their goods for cheap, it just means that the Chinese people are working for Indians and selling their labor to us. This is good for us. If this causes a situation where Indians cannot afford to buy Chinese goods, the Chinese will no longer sell them to Indians and Indians will start working in order to earn money. An equilibrium is reached.

Inferno: it is the same logic with traders. If a big trader wants to sell at a loss, they are welcome to do so. It is good for the Indian consumers. They get goods cheaper than the cost price. Later if they raise their prices, they won't find buyers. So enjoy while it lasts.

You are wrong on another count. The alternative is Reliance and Tata, not small shops. In fact, the whole thing is probably orchestrated by them so they can get a share in the big retail.

The big retail owners also provide jobs to a lot of people. Why do you not factor that into your arguments?

M. Patil said...


You did not answer any of the questions raised.


(i) How does the producer(farmer, manufacturer) benefit?
(ii) How will India pay for it without causing balance of crisis?