The Bread Versus Steel Paradox

Why doesn’t the cost of these correlate to the investment needed to produce them?

Bread= $3.80/pound.

Cold drawn bars for machining right now ~$0.66-68/pound.

This great question came from a discussion I had with Ronnie Masliansky, General Manager, Marketing and Product Control, Arcelor Mittal Steel.

Arecelor Mittal Long Carbon North America is a PMPA Technical Member.

So why do you think that the price of these items doesn’t correlate with the investment needed to produce them?

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4 Responses to The Bread Versus Steel Paradox

  1. Ryan Kutz says:

    Attempt at an Answer:

    Government involvement increases the price of production

    U.S. government involvement in the steel industry began in 1952 when President Truman seized the steel industry to prevent a strike.

    Government support for agriculture began early in our nation’s history. Presidents Washington and Jefferson experimented with
    new plants and growing techniques as farmers.

    Speaking of Jefferson…

    “Were we directed from Washington when to sow and when to reap, we should soon want bread.” Thomas Jefferson

    Supply and Demand logic tells us the more we want bread the higher the cost!

  2. Tom Wahl says:

    SUPPLY AND DEMAND and people willing to pay insane amounts for fuel set by the oil industry. Which everybody uses as an excuse to jack up the prices.

  3. Eric Kline says:

    Ryan, the cost of a bushel of wheat is trading today for US$274/metric ton ==> wheat costs $0.12/lb, so I think agricultural subsidies aren’t really a factor. I think the difference is that gourmet bread is a niche market and the product is sold directly to the end user. Steel is a pretty cut throat industry that is strongly subsidized by many national governments, and a lot has to happen to that cold-drawn bar before it ends up in a consumer’s gadget. On the other hand, look at the price of a high end watch. It’s a really great point to ponder, Miles! Thanks for posting.

  4. I agree with To Wahl, it all boils down to SUPPLY and DEMAND. since one of our basic needs is Food, then prices for bread inflate.

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