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In today's edition of CNN Student News (transcript), devoted to the topic "breakfast cereal", the following claim was made:

Let`s start with the cereal itself. At its core, cereal is actually the grain, like corn, oats or wheat. These energy dense grains are some of the most abundant crops we grow and the cheapest. In fact, one economist says the cardboard box costs more than the corn that goes into your cornflakes.

Is there a way of making the statement precise (what does "cost" include for both the box and the cereal?) such that it can be backed up with available figures?

unor
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Log
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    I was just explaining to someone that in the US, the cost of foodstuffs is far less than the cost of paying people to handle them. Think about it: 100 years ago, 97% of US people lived on family farms. They grew their own food. Since then, basically the entire growth of the economy has been on "inventing" new products and keeping people busy selling them. It is entirely artificial. If we had needed something, we would have had it long ago. It is basically true by definition that the economy is there to "grow the economy" because we got along without the economy for a million years. –  Feb 09 '16 at 02:33
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    @nocomprende Yeah, we got along fine without vaccines and abundant food, if we really needed those things we would have made them a long time ago. – Paul Feb 09 '16 at 04:23
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    "100 years ago, 97% of US people lived on family farms" I'm sorry but that's completely and utterly wrong. In 1910, only 54.5% of Americans lived in rural areas; by 1920, that had fallen to 48.8%. Source: [U.S. Census Bureau](https://www.census.gov/population/censusdata/urpop0090.txt). – David Richerby Feb 09 '16 at 05:13
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    @Paul I do wonder why it took so long. If we accomplished all this in 100 years, why not sooner? –  Feb 09 '16 at 13:02
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    @nocomprende That's an extremely broad topic. So I'm going to give you an extremely broad answer - capitalism, in the broadest sense. Mainly: 1) economic freedom (allowing you to experiment and profit from your invention), 2) accumulation of capital (technologies, machines, energy - all the things that act as "work multipliers"). The cool thing about accumulation of capital is that it kind of snowballs - the more capital you have, the faster you accumulate it and the faster the overall progress (e.g. cheap food -> more people left over to do things other than making food). – Luaan Feb 09 '16 at 14:51
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    @nocomprende agriculture itself is a recent invention - modern humans have existed for ~200k years, but agriculture is probably <30k years old. Farming is no more "needed" than most other things, in the sense that we can - and have, for most of our existence - survive without it. – André Paramés Feb 09 '16 at 22:43
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    @nocomprende: people in America have held up the economically independent farmer as an ideal since the time of the [American Revolution](http://www.lewis-clark.org/article/1749), but there have also been large cities in America since before this time. (Also, this ideal coexisted with the use of slave labor.) – paradisi Feb 10 '16 at 00:55
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    @DavidRicherby: Yes, people forget how old modern history is. 100 years ago is usually considered modern times. 200 years ago would qualify as pre-modern. IBM is 115 years old. – slebetman Feb 10 '16 at 06:51
  • @AndréParamés - good point. Just for fun, I suggest that you try to get along without farmers and the products they produce for 48 hours. Best of luck. – Bob Jarvis - Слава Україні Feb 10 '16 at 12:12
  • @BobJarvis if I was deprived of all human inventions from farming and beyond, the lack of eyeglasses would probably get me killed way before the lack of farming products did so. But as a species, we'd survive it - just a few decades ago, hunter-gatherer tribes were still easily found across the globe. – André Paramés Feb 10 '16 at 23:33

1 Answers1

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According to the 2000 book Handbook of Cereal Science and Technology, Second Edition, page 616:

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For a box of ready to eat cereal:

  • Grain cost is $0.09

  • Other ingredients $0.05

  • Packaging Cost $0.10

Additionally, Kellogg's is quoted as saying that from 1 bushel of corn 38 12-ounces boxes of cornflakes can be produced.

Current (2/9/2016) corn price is $3.60 per bushel, so $0.09 happens to be correct today for corn cost before any processing, but has varied drastically over the past 16 years, from under $2 per bushel to over $8 per bushel.

DavePhD
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    Note also that most people would interpret "cost of the actual cereal" to include not only the cost of the raw ingredients, but also the cost of actually processing them into the finished product. – Nate Eldredge Feb 08 '16 at 20:36
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    @NateEldredge the actual quote in question says "more than the corn that goes into your cornflakes" which corresponds to grain cost. The handbook lists the other costs: advertising $1.02, grocery store stocking $0.68, manufacturing $0.32 and labor $0.18. – DavePhD Feb 08 '16 at 20:43
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    Similarly, only a small fraction of the cost of your loaf of bread goes to the wheat farmer. – GEdgar Feb 08 '16 at 21:35
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    Whose profit are the $0.93 profit? The profit of the grocery store? The profit of the manufactory, of the company that does the advertising or the farmer? Or all of them? Of whom exactly? – miracle173 Feb 09 '16 at 01:50
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    Note that this doesn't establish the answer one way or the other. The ten-cent cost of the packaging includes both the cardboard box and the pastic bag inside it. Since the cost of the corn is given as $0.09 and the figures are rounded to the nearest cent, it's possible that the corn costs more than the box, even though it costs less than the total packaging. – David Richerby Feb 09 '16 at 01:59
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    @DavidRicherby: That's a good point. But conversely, corn is significantly cheaper than other major grains found in breakfast cereals (wheat, oats), so if this table shows the cost of the grains in the *average* cereal, then the cost of the corn in cornflakes is likely to be significantly less. – ruakh Feb 09 '16 at 02:15
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    @NateEldredge "the cost of processing them in to a finished product" is undefined, it depends on the process. How much does it cost you to buy flour and sugar and bake a cake yourself? We can price the ingredients, but not the peoples' time to design, manufacture, package, advertise, ship, stock, etc because those vary with process. However the real point is that the ingredients cast only a small percentage of the shelf product, which was the point of the assertion. This is true in the economy in general. Why didn't we make digital watches before grandfather clocks if clocks are so expensive? –  Feb 09 '16 at 02:37
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    The "cost of the box" can also be broken down into design, cardboard, printing, conforming to nutritional labelling laws, ... – DJohnM Feb 09 '16 at 03:50
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    And it could be argued that part of the design of the box is "advertising"... which is a massive component. – Floris Feb 09 '16 at 16:03
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    I think this table really highlights all the overhead of processed food, and makes a good argument against it. If you are poor, would you rather pay $3.39 for a box of cereal, or $0.09 for the actual nutrition in it which you could then process (e.g. cook) yourself for far less than the remaining $3.30? (Yes I realize you can't actually get the raw corn for $0.09, but you can still get it for a lot less than $3.30) – Michael Feb 09 '16 at 17:49
  • @Michael. To be fair you could 'only' cut advertising and profit (non-profit organization). Which would already reduce the price significantly. To save even more one could of course directly buy in bulk from the supplier to reduce grocery store costs. – magu_ Feb 09 '16 at 18:11
  • @magu_ right, what i'm suggesting is that buying the raw corn in bulk and then cooking and eating it rather than going through the steps of making corn flour, then forming that into something else would cut out most of the remaining cost. still would be buying the bulk corn retail though (you aren't buying tons of it) so you are either pay some retail markup, unless you buy it straight from the farm, in which case you have transportation costs plus the time to try to find a farmer who will just sell it to you. – Michael Feb 09 '16 at 18:46
  • It seems like the manufacturing cost would have to be included for a "box ready to eat". Otherwise you have a box of "ready to pop popcorn". – corsiKa Feb 09 '16 at 20:55
  • If someone wants to do it, the kind of cardboard that you make cereal boxes out of can be bought in bulk at around $700 per ton. So divide that by the weight of an empty box to get a ballpark figure. – slebetman Feb 10 '16 at 06:56
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    So if somebody sells a cereal, doesn't tell anybody about it (ie don't advertise) and it's BYOB (bring your own bag) we could all finally be eating cereal for pennies a day like God intended. – coburne Feb 10 '16 at 15:30
  • @coburne I mean, one could just go buy a bushel of corn for under four bucks and feed a whole family for over a month! of course there are still other nutritional requirements to be met (you can't live just on corn), but it's a start! – Michael Oct 13 '19 at 20:06