When Tony the Tiger gets fired, we’ll know biofuel mandates have taken their toll.
Correspondent Susan Koeppen said on “The Early Show” Oct. 23 consumers would be “paying more and getting less” for some food products they buy because companies are downsizing their products.
“It’s called downsizing,” Koeppen on the CBS broadcast. “More and more companies are going to start shrinking their products.”
Ice cream consumer Yalanda Medina said she felt companies didn’t think she was “smart enough to notice” she was getting less. In short,
Koeppen went to “consumer advocate” Edgar Dworsky, who told her that downsizing is “a sneaky way to pass on a price increase.”
“Most people can’t see the difference between the old and the new, except when they’re side by side and even sometimes when they’re side by side you can’t tell the difference,” Dworsky said.
Dworsky has been running [1]Consumer World since 1995. The organization is dedicated to tracking down how much products change in price.
Todd Marks of Consumer Reports told Koeppen that the cost of raw materials has gone up, which is what the companies contacted by CBS News said as well.
“We contacted several of the companies that make the products mentioned in this story: Hershey’s, Hellman’s, Breyers and Kellogg’s, and they all said that the rising cost of commodities has led to a change in the way they make and package some of their products. But they do point out that many of their products have not changed, but tough economic times have led to some changes,” said Koeppen.
But Koeppen downplayed one of the big reasons why companies are downsizing.
Agricultural economist Stewart Ramsey at Global Insight, Inc., told the Oct. 16 [2]National Journal that food prices have gone through a transition because of the mandates for biofuels. Biofuels are often made by the same commodities used in common foods – most notably corn.
“It is interesting when you look at cereal prices, if you were just to net out the change in the grain price you wouldn't come up with that big of a change in the whole box of cereal. But the reality is that the marketing costs, the transportation costs and so many of the other pieces of the puzzle have changed pretty dramatically as well. We do see some pretty good bump-up in the whole spectrum of food prices,” Ramsey said.
He also mentioned another reason why food prices have been changing.
“The top one is a lot of the growth in income and diets and the demand for food in, particularly, Asia –