Newfoundland has a hard bread shortage, but why do they eat it?
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I don’t think we realize how good we have it these days.
Maybe the flour is difficult to buy or most people don't have a way to dry the bread? Being on the ocean, St. John's is a pretty humid place.
Sure, you can probably find a way to achieve a "good enough" result with normal household appliances, especially when it doesn't actually need to be stored for years and you're just going to soak it again for some tranditional recipe.
But it's a lot more effort than most people want to invest when they just want to replicate that recipe.
The only real question is which kind of flour to use. I'm sure it ought to be whole wheat or a blend of whole wheat and white.
Is it really that hard to raise the price to keep it in stock?
The situation here is that there is a temporary supply shortage. If you raise the prices to drop sales and guarantee you have stock it means you priced out most of the people. You narrowed your market only to the few who can afford it and those few are slowly going through that stock.
How does that help the situation? At the end of the day some people will have the bread (because they were in the store early, or because they have money) and other won't.
Raising prices in this situation only helps make more profit, extract more from the existing market. It does nothing to solve the problem of people having bread.
The current primary supplier had a temporary setback caused by a fire in mid-March and operated at reduced capacity, before going back to full capacity in July. Whatever flexibility competitors had to increase capacity with little to no investment was probably captured. A few months of marginally improved prices won't incentivize any competitor to invest. Hard bread isn't the kind of product that can command a big price before customers lose interest.
Even if you already had a factory that could easily be converted to this product, you’d have to factor in the switching cost, opportunity cost, shipping, marketing and regulatory stuff. This likely offsets the consumer’s willingness to pay extra during the shortage, and as soon as the original factory is back, they’re going to price you back out. They’re already operational, as per the article.
This is not the goal. The only mitigation that could make sense is to impose limits per person or household to avoid someone hugging all the supply.
> This allows there to always be supply available for purchase
By the very few who can afford it, by definition of raising the prices until the products barely sell. If you have 100 items and 1000 people you guarantee that at least 90% of people won't get an item. It doesn't matter if it's because there is none left, or because it's too expensive. If you're hungry because the shelf is empty, or the shelf is full but you can't afford it, what's the practical difference for your stomach?
It is what the stores are having a hard time accomplishing.
>the shelf is full but you can't afford it
From the store's perspective it is still in stock and supply is available. How much people eat of it is separate from what the article is discussing.
It's a proxy for what the stores have a hard time accomplishing. The goal is to fulfill demand. Do you genuinely need the explanation why a store's goal is to sell not "have on shelf"?
> From the store's perspective it is still in stock and supply is available
I guess I do need to explain. Now I'm starting to think this is intentional hard headedness :). If the goal was just "have X on the shelf" they'd put one item and price it like gold. Or put it really high on the shelf. Goal achieved. When the authors of these articles say "have on shelf" they assume the reader is reasonable and intuitively makes the connection to "fulfilling demand, people able to buy".
> How much people eat of it is separate from what the article is discussing.
You're right. What the article is discussing is how much people can buy. If there is no supply then people aren't buying. But make no mistake, the buying is important, not the being on the shelf. Maybe some stores put the breads in a basket ;).
(not that I haven't done it myself occasionally, but guys you really are not helping anyone here including yourselves)
I love how in economics, a shortage can be solved by increasing the price instead of by increasing the quantity. It really makes you understand that the field of economics uses stupid definitions of words.
I’m actually skeptical this shortage affects people too badly, since the stuff lasts forever. Probably enthusiasts have enough in their pantries to last them through a temporary factory downtime?
It's not bought for its long-shelflife property anymore, it's basically just an ingredient in some popular traditional local recipes. Sure, those recipes emerged because the shelflife used to make hard-tack a reliably available source of calories, but that's basically gastronomical skeumorphism.
That clearly isn't the goal.
Instead, the claim is more limited - that even in times of shortage if you want to make sure that the item in question is still available, raising the price will accomplish two things: it will encourage marginal production and discouraged marginal consumption.
Without prices, the only mechanism you would have to accomplish the same effect, would be a political decision about who did or not deserve to have hard bread, while you work out the production issue.
In both systems, you’re doing rationing, just by different means.
Whether under capitalism or collectivism the way you solve a shortage is always the same - you produce enough for everyone who wants the thing.
The difference is the presence for absence of the feedback mechanisms like prices. The problem with collectivism is that once you get rid of prices, there is no explicit feedback mechanism. There may be implicit mechanisms such as a waitlist, but ultimately the decision to increase production is turned into a political decision. I doubt many people care if production decisions about hard bread are made by politicians or business people, but in more consequential areas, such as housing, we have a century of experience of what happens in production decisions are collectivized and politicized. (it is illegal to increase the national stock of interior residential floor space by even one square foot without prior political approval, I.e. rezoning, variances, etc.)
- the producer has already repaired the factory that will restore supply shortly, so the signal is effectively useless
- your customers are going to remember that you gouged the shortage situation
Raising the price fixes the metric (is it in stock?) but doesn't fix the actual problem.
https://news.ycombinator.com/newsguidelines.html
If this article generates substantial discussion and doesn't veer off into pointless arguing, it qualifies.