When we lived on Staten Island, a local Jewish book store charged high prices for his goods. When asked why his prices were higher, he said that the cost of gas and the toll on the bridge meant that he had to raise his prices. What was absurd was the fact that the toll and the gas were a fixed price. No matter if he brought ten dollars or one thousand dollars of merchandise across the bridge,the cost to him was the same. So why, then, was the full bridge toll added to every item? It seems to us, if you bring over ten items the cost should be broken down over ten items. If you bring one hundred items, the cost per item should be much lower. Sadly, that was not the case.

That seems to be a common disease in the kosher food industry. Costs in the kosher aisle have gone through the roof. The sad part is that no one seems to know why.

Granted, in some parts of the kosher industry, the cost of supervision of a product is a factor, but in most cases, the cost of supervision is neglible. So why the vast difference in price?

Over on Failed, there is an article about the high cost of keeping kosher. The article speaks of a family paying a huge amount for kosher grape juice- an amount at least three or four times the East Coast price.

This is a bad situation- the question is: Can something be done about it?

Posted on June 12, 2009 at 12:05 am by rebrapp · Permalink
In: Kosher News

One Response

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  1. Written by ah1270
    on June 12, 2009 at 11:16 am

    I don’t know the exact answer but clearly one reason for the high prices is the volatility of the product… high risk. At a simple misunderstanding or the word of a random rabbi, all of the product on his shelves can be rendered unsalable… often through no fault of his own. Any business must account for that possibility so a higher price acts as an incentive and cover possible loss.

    Logically speaking, if easy, fat profits were the reason for the higher prices in the kosher food industry, then every knucklehead and his mother would be opening a kosher grocery store. Since that is not happening there must be some reason why so many people are leaving those “easy, fat profits” on the table. Perhaps it is because the profits are not so easy and the profits can suddenly disappear without warning.

    Rubashkin is an obvious example. Regardless of the reason behind this debacle, the innocent grocery store owner must scramble to protect his current inventory of Rubashkin meats and then when that becomes impossible, scramble to get new vendors who realize that the grocery store is at a disadvantage in the negotiations. Prices will go up if for no other reason that scarcity causes store owners to bid up prices to fill their stores.

    Straits Matzah is another example: All that inventory suddenly rendered unsalable in the last few days before Passover. How many times can one expect a small business owner to be able to absorb that loss? He is not a fool. He charges more… a lot more… just to cover the possibility of loss.

    I recall a history lesson. A walled city was surrounded by an army and as a consequence, food prices went up. Vendors tried desperately to get food into the city risking death and as a consequence charged higher prices. The prices became so high that the city placed a cap on prices. The food stopped coming in and the city fell.

    It didn’t cost much more (physically) to get the food in than it did before. The customer was being charged for the RISK taken and not the actual costs paid. As long as the food vendors were allowed to charge for the risk, they took the risk. When the compensation was fixed but the risk continued to grow, the food was no longer brought in.

    A vendor can’t be honest with the man who has the power to destroy him. He can’t explain to the rabbi standing before him that the rabbi, himself, is a serious business risk. All he can do is lie and say “the tolls went up” or “gas prices are up” and hope for the best.

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