“Fresh” Orange Juice and Industrial Supply Chains

When is “fresh squeezed” Orange Juice not very fresh?

When the big juice companies

pasteurize, de-oil, and then strip the oxygen from their OJ before chilling it to 32°F and pumping it into million-gallon, refrigerated, epoxy resin-lined, carbon steel, aseptic storage tanks.


Then,

it often sits for as long as a year, from processing season to processing season, before being rejuvenated with the addition of specially formulated flavor packs (to ensure each brand maintains its own trademark taste), and shipped to a distribution center in Jersey City on the refrigerated box cars of the CSX “juice express

Anyway, this is not a comment about the quality of the juice or its “freshness”. Instead, it goes to illustrate the highly industrialized nature of our food supply chains. 

In the 19th century, something like this would have been unheard of.

Instead, most “perishable” foods in the US such as juices, vegetables, fruits, meat, etc., would have been consumed locally and/or quickly for the most part. Therefore it is likely that demand and supply were not evenly matched and “surplus” food (a lot of it?) would have probably decayed or have been processed into jams and such that of course couldn’t recreate the “fresh” experience.

But with advances and innovations in cooling technology, the rise of refrigerated marine shipping containers, refrigerated rail cars (cited above) and refrigerated trucking containers, most developed countries and increasingly, developing countries, are able to enjoy fresh, non-seasonal foods on a year-round basis.

Purists complain that all of this cold storage and transportation and the use of chemicals diminishes taste, at a minimum, and could cause health issues too. Sure, there is truth in this. But again, many consumers probably don’t care. Those that do either eat seasonal foods and/or minimally processed, “fresher” foods that endow those supplying those, such as Whole Foods, with pricing power. 

And so it goes.

A fascinating article about the cold-storage-supply-chains that have created entire (non-local) markets for different foods across the world (I excerpted from it, above) makes for an interesting read. [And tip of the hat to AndrewSullivan.com where I learnt about this article this morning.]

 

Scalpers: Batman’s Real Bane?

A bunch of Batman fans were not able to see the movie on its opening night because scalpers were selling tickets for 500% or even 800% more. 

As a consumer, naturally, I don’t like it. 

I don’t like this “secondary market” because I am forced to pay significantly more for something that I think I should be able to buy at face value. And this practice of course, is not limited to the US by any means. When you want to see a (over?)hyped movie in some countries, you go to the venue knowing that “scalpers” might be selling them for 2x or 3x their face value at the gate. Or here in the US, for sold-out concerts and such (add movies to this category now), you might check out StubHub or Craigslist to see if scalpers are selling them there. Or, if you live in certain states where ticket-scalping is illegal then you check out scalpers’ legal offices in neighboring states. 

But from an economics perspective,

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Brazilian Sugar and Ramadan

 

Rain in brazil (not the lack of it, but too much of it) is creating a sticky situation for Muslims ahead of Ramadan.

Muslim fasters consume, among other things, a large amount of sweets and treats after breaking their day-long fast during Ramadan. According to an article in the Wall Street Journal, this year’s increased demand is coinciding with reduced supply from Brazil and has caused a 21% increase in sugar prices since June.

Those that locked in supplies via commodity futures contracts may be OK but a projected sugar glut earlier this year probably didn’t help the hedgers much:

It is unclear how the Mideast’s biggest buyers fared. Some locked in supplies before the rally. Egypt bought 50,000 metric tons of raw sugar at a tender in late May, when prices were trading near 21-month lows. However, it is possible that some buyers delayed purchases because they expected sugar prices, which began selling off in late February, to keep falling, only to pile in once prices moved higher.

This example (behind WSJ’s paywall), the Japanese earthquake/tsunami and its effect on various computer and auto makers, etc., illustrate very clearly that while global supply chains have changed our lives in many ways (mostly good), the same global supply chains now mean that seemingly unrelated events in different parts of the world can affect in a major way the street vendor or corner store’s prices.