It was interesting to read the 1st Quarter Earnings reports of Dean Foods and Saralee.
In the following quotes from their financial reports, you can read that butterfat (a key component of Dean Food's products) increased 70% in price in the past year, and that made their profits go down 33%.
And Saralee mentions "sharply increasing commodity prices."
These reports to their investors are kind of hard to understand, lets see if I can reword what they might be saying: "We didn't make as much profit as we planned, we can't give you as high a dividend as we planned, because the prices of our raw materials (commodities) went up so much. But we will raise our prices in the next quarter and then we will make profits and be able to pay better dividends."
I am not pointing this out to criticize the corporations, they have to pass on their costs in order to stay in business. I am pointing this out as evidence that I'm not making this up.
The message to consumers is this: Prices on food are going up. So it would be wise to buy your food storage now.
Nov. 9, 2010- Class II butterfat, a key component of the Company's creamer, cultured and ice cream products, increased 26% from the previous quarter and was 70% higher than in the third quarter of 2009.
Consistent with previous quarters, retail pricing for private label milk remained well below historical levels and fluid milk industry pricing remains highly competitive. Widened price gaps between branded and private label offerings drove continued consumer trade-down to lower-margin private label products. This, combined with overall volume weakness and rapid butterfat inflation drove Fresh Dairy Direct-Morningstar operating income in the third quarter of $116.5 million, a 33% decline from $174.9 million in the third quarter of 2009.
Nov. 9, 2010- “As anticipated, our first quarter operating income came in below the prior-year period. We see our price
increases coming through across the board, but in the first quarter they still lagged sharply increasing commodity
prices. We are confident that the additional price increases we have announced will mitigate commodity inflation
for the full year.
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