Oak Ridge
UKC Forum Member
Registered: Aug 2003
Location: Indiana
Posts: 6168 |
quote: Originally posted by Maniac
i would say there wont be a price drop on the dog food. because they know that people will still buy food cause they haft to feed their pets. but i could be WRONG! if you realy think about it food went up cause of the price a frate. big R tractor suply tsc . they all got a 50% rite up on every thing. so that tells you what they are makeing off us people. and some store have alittle more than 50% rite up.
Here is the "fly" in your ointment.
According to my industry source (I'm not making this up), prices rose on a bag of feed because of the increase in ingredient prices. The company that I am aware of does not charge for FOB including freight....Freight is charged by the actual mile, and paid to the trucking company. This company got out of the shipping business and now contracts the shipping.
The plant where the feed is made is operating at an 85 to 90 percent capacity, and they raised the price per bag to remain profitable based upon capacity and expense to make the feed. The are currently making a profit at their current productivity rate.
HOWEVER, over the past few months, they have seen overall orders drop....they are still making the same profit per bag (they buy large quantities of ingredients, and therefore have not yet recongnized the drop in commodity prices), but orders are dropping off...the assumption or fear is that folks are cutting back on the NUMBER of dogs that they are feeding.
Now, we all know that a plant that is running efficiently at 85% capacity will not be as profitable as one that is running at 65% capacity....so the decision point is when to drop the per bag price, to maintain volume......
It's not as easy as you think.
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