Bread and milk price war

The current price war between the major super markets over milk and bread would be welcomed by most consumers, one would think, but the courier mail has other opinions.

They trot out the independent bakeries, who all complain they can’t bake a loaf of bread for under $1.50. Somehow Coles and Woolworths are going to put all these guys out of business.

If thats correct, we should expect big bakers like Tip Top and the like to go out of business too, because their bread is usually priced between $3 and $4 a loaf. And yet, they still do okay, even when you have been able to buy bread for a $1.20 a loaf nearly everywhere for as long as I can remember (actually, it wasn’t that long ago you could get it for $1 at the local veggie shop)

Independent bakers will continue to bake a more speciality product, and the people who shop there will continue to pay a premium price for that premium product. People who are buying cheap bread will continue to do so, and save a little.

Personally, I have a problem on the milk side. It would be worth the ACCC looking into the milk market, and seeing how much market power the big supermarkets have. I once talked to a dairy farmer, and I asked him, why don’t dairy farmers simply put their price up to a more equitable level? He said the problem was there were always going to be enough dairy farms who would accept the very low rate paid by the big milk buyers, so if you don’t accept it too, you simply don’t get to sell your milk.

Perhaps that’s just market forces at work too, but I think its worth a look.

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