61

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?

Improve this question
10
  • 7
    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.
    – user29285
    Feb 9, 2016 at 2:33
  • 24
    @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 9, 2016 at 4:23
  • 37
    "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.
    – David Richerby
    Feb 9, 2016 at 5:13
  • 3
    @Paul I do wonder why it took so long. If we accomplished all this in 100 years, why not sooner?
    – user29285
    Feb 9, 2016 at 13:02
  • 7
    @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 9, 2016 at 14:51

1 Answer 1

Reset to default
79

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

enter image description here

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.

Improve this answer
16
  • 36
    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 8, 2016 at 20:36
  • 36
    @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 8, 2016 at 20:43
  • 4
    Similarly, only a small fraction of the cost of your loaf of bread goes to the wheat farmer.
    – GEdgar
    Feb 8, 2016 at 21:35
  • 24
    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 9, 2016 at 1:59
  • 17
    The "cost of the box" can also be broken down into design, cardboard, printing, conforming to nutritional labelling laws, ...
    – DJohnM
    Feb 9, 2016 at 3:50

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .