October 27, 2007

The price of pasta

It seems the price of pasta may be going up and there are some concerns about the manufacturers business practices. From the BBC News:
Italy investigates pasta makers
Italian authorities have opened an investigation into pasta manufacturers over alleged price fixing.

Italy's regulator said it would examine the practices of Italian pasta manufacturers to see whether they were uncompetitive.

The probe follows a warning from the federation in July that pasta prices would surge by 20% by the autumn.

High wheat prices were blamed for the sharp rise, but consumer groups accused pasta makers of behaving like a cartel.

Italian authorities will investigate whether members of the Industrial Union of Pasta Makers, which represents about 85% of the market, colluded to fix the price of spaghetti, fettuccine and other favourite pasta dishes.

It follows last month's plea from consumer groups to refrain from buying or eating pasta for one day in protest against the recent price increases.

Manufacturers have argued that they have to pass on the rising cost of durum wheat, from which Italian pasta is made.

The price of wheat has risen, in part because producers of biofuels buy it, hence demand is outstripping supply.
Not good at all -- I would not be too surprised if they found a Cartel. This sort of activity isn't just limited to American companies (thinking Archer Daniels Midland). A minor nit -- the grain is not used for biofuels, the grain is more expensive because more land is being given over to Corn because of the subsidies for biofuels. Supply and demand. Hat tip to Amazon al Dente's Blog for the link. Posted by DaveH at October 27, 2007 6:24 PM
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