Monday, June 05, 2006

Garbage on Groceries

I am a regular reader of Forbes magazine, but of their stock opinions. I don't expect to embrace healthy living or societal choices from reading this magazine. So when MSNBC reproduced this piece of junk, titled Healthier eating would raise grocery bills, I threw a fit! Gosh, did they get someone from the National Council of Chain Restaurants to write this crap? The article argues that healthier choices would spike up grocery bills, and disses Eric Schlosser's (author of Fast Food Nation) call to migrate to less processed foods. The author of this piece grudgingly acknowledges Schlosser's observation that the premium is small compared to the medical savings from avoiding Big Macs.

But how can someone writing about a financial magazine be so blind to economies of scale. Here's one observation about organic food:
Unfortunately, organic food is typically more expensive than industrialized food, usually costing 25 percent to 100 percent as much. That may explain why Whole Foods Market, which has capitalized on the public's interest in more natural foods, has been nicknamed "Whole Paycheck" for its high prices. An example: Last week in downtown Chicago, a dozen large regular eggs cost $1.79, while a dozen large organic, cage-free eggs sold for $3.39.

Yes, but as more people embrace organic food, costs come down. Whole Foods Market sells the cheapest organic tofu in town, cheaper than the non-organic tofu at Kroger or other giant retail stores. How? As a WFM sales assistant told me, once they have enough scale, prices come tumbling down. Most of the prices aren't production-related, they are distribution costs.

That's not to say organic food's gonna be cheaper anytime soon. It's to say I look forward to the day a tightwad like me can buy organic food. And with WalMart getting into the business, that day may not be too far away!

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