The state of the economy at the street level

[moXJO]

A price drop on the ice cream. A really important part of the shopping.
Would be far better if meat, fruit and vegetables were more realistically priced.

Meats dropped in the local Italian fruit market by a decent amount.

 

[moXJO]

From my view it's still restaurants/take away that are doing all the business. The shops don't seem to be doing much trade at all.
Plenty of people walking around.
Most shops I ask say stock isn't moving.

 

[sptrawler]

From my view it's still restaurants/take away that are doing all the business. The shops don't seem to be doing much trade at all.
Plenty of people walking around.
Most shops I ask say stock isn't moving.

Yes the same here, people still eating tons of take away and drinking, but in the major shopping centres near me a lot of the shops have to close their doors to go to the toilet or get lunch, as there is only one worker in most of the smaller shops now.
Electronics seem to be selling well, I'm looking at updating my laptop (it's 10 years old and struggling) every shop I went to JB's, Hardly Normal, office works and the local PLE were all busy in the computer section.

 

[moXJO]

Yes the same here, people still eating tons of take away and drinking, but in the major shopping centres near me a lot of the shops have to close their doors to go to the toilet or get lunch, as there is only one worker in most of the smaller shops now.
Electronics seem to be selling well, I'm looking at updating my laptop (it's 10 years old and struggling) every shop I went to JB's, Hardly Normal, office works and the local PLE were all busy in the computer section.

I upgraded the laptop last year. Previous one lasted over a decade(bought the best specs at the time). Phone will be next. But I compared the specs on the phone and its not enough of an improvement to change just yet.

People seem to be doing the minimum buying that they can.
Even supermarkets have less full trolleys going to checkout. Mainly less items through the self service.

 

[sptrawler]

I upgraded the laptop last year. Previous one lasted over a decade(bought the best specs at the time). Phone will be next. But I compared the specs on the phone and its not enough of an improvement to change just yet.

People seem to be doing the minimum buying that they can.
Even supermarkets have less full trolleys going to checkout. Mainly less items through the self service.

Yes exactly the same here, I just updated my phone for the holidays I have coming up, I want a camera with a phone on it, not a phone with a camera on it. Plus the other half doesn't care about phones, so she gets my old one.

I do the same as you with the laptop, picking up a lightweight 14" i7 +ssd, for travel, the other half gets my old one for her online sudoku, brain teasers, 1,000 piece online jigsaws. ?

 

[Dona Ferentes]

Am about to visit local centre, and keen to check the EoFY sales ... already getting a few 60 per cent off emails; will 60 be the new 50?

 

[farmerge]

How can you say woolies is price gouging when their most recent net profit margin result was 2.8% or something lol...

What I do know about the "super" supermarkets is that the red meat prices are over excessive.
What we got for some of our plum yearlings recently doesn't equate to supermarket prices.
Top price for us was around $3 a kilo, dressed out is about $6.

 

[Dona Ferentes]

Am about to visit local centre, and keen to check the EoFY sales ... already getting a few 60 per cent off emails.

Was like a ghost town. Weekends may be different, ... but that's why I go midweek.

 

[InsvestoBoy]

What I do know about the "super" supermarkets is that the red meat prices are over excessive.
What we got for some of our plum yearlings recently doesn't equate to supermarket prices.
Top price for us was around $3 a kilo, dressed out is about $6.

Are you comparing farm gate prices to the price for a retailer that has to rent a large store, pay 10-50 staff, have food trucked in every 1-3 days, energy costs for refrigerating 1/4 of the store etc and expecting them to be closer to your asking price?

The title of the thread isn't "the state of the economy at the farm level"

I just googled "how much margin does woolworths make on meat" and found this article from 2008, farmers think stores making >100% margin on mince, woolworths reckons they make a bit less than 2% gross margin before accounting for all the costs of running a store.

A beef with pricing

Finger pointed at Coles and Woolies for high Australian beef prices.

www.smh.com.au

John Carter, a cattle farmer and for ten years the chairman of the NSW Meat Industry Authority agrees. The giant supermarket chains make a 112% mark-up on mince alone, he says. ''We (the farmers) are getting around 25% of the final retail price''.

...

Woolworths and Coles deny the meat industry claims. Woolies issued a terse press release saying it only made a gross margin of $1.70 on a kilo of beef before its store costs, wages, lighting, rent and tax.

 

[InsvestoBoy]

I actually see this all the time, even in supposedly economically literate people, thinking that airlines/petrol stations/supermarkets are price gouging them when you can see the profit margins for all those industries are super low, usually well under 5%, consistently.

From memory the net margin on a litre of petrol for a petrol station is something like 2c/L.

 

[Dona Ferentes]

“Now, as the heat comes out of many commodities and input prices ease, farmers are adjusting their outlook in response to normalisation of economic conditions.”
- Marcel van Doremaele, CEO, Rabobank Country Banking Australia

 

[mullokintyre]

Are you comparing farm gate prices to the price for a retailer that has to rent a large store, pay 10-50 staff, have food trucked in every 1-3 days, energy costs for refrigerating 1/4 of the store etc and expecting them to be closer to your asking price?

And you don't think the farmer has the same issues?
High capital cost for farm land and ag machinery, high water costs if they have to irrigate, vet costs, supplementary feed costs, high energy costs, transport costs to sale yards, agents costs, yard fees, AMLA costs, registration costs, diesel costs etc etc.
And they are price takers, not price makers like the grocery chains.

The title of the thread isn't "the state of the economy at the farm level"

I just googled "how much margin does woolworths make on meat" and found this article from 2008, farmers think stores making >100% margin on mince, woolworths reckons they make a bit less than 2% gross margin before accounting for all the costs of running a store.

A beef with pricing

Finger pointed at Coles and Woolies for high Australian beef prices.

www.smh.com.au

Don't know where you got the 2% gross margin from, I read through the article and could not find it.
Perhaps you need to look a bit further, or at least look at slightly more updated figures.
from Inrelligent investor quoting figures as at the end of the 2022 fin year.

Woolworths’ Australian grocery business saw its gross margin increase by 0.74 percentage points to 30.4%, while Coles’s rose by 0.42 percentage points to 26.3%.

And that is accross the entire grocery range.
There will be wide variability in the margins between different products.
The grocery chains do very nicely thank you.
Mick

 

[InsvestoBoy]

And you don't think the farmer has the same issues?
High capital cost for farm land and ag machinery, high water costs if they have to irrigate, vet costs, supplementary feed costs, high energy costs, transport costs to sale yards, agents costs, yard fees, AMLA costs, registration costs, diesel costs etc etc.
And they are price takers, not price makers like the grocery chains.

I'm not sure what your point is? All I am saying is it's dumb to compare differences between farm gate price and the retail price and conclude that the supermarket is nefariously gouging.

Perhaps you need to look a bit further, or at least look at slightly more updated figures.
from Inrelligent investor quoting figures as at the end of the 2022 fin year.

I personally think it's not very inrelligent to quote gross margin for a grocery store as the indication of anything. Or per your next point, not very inrelligent to look at the average across the range vs the specifics for the meat, which is why I pasted that specific article.

And that is accross the entire grocery range.
There will be wide variability in the margins between different products.

Obviously. But the margin they make on meat is closer to the average than some margin machine for supermarkets, otherwise the price at the butcher would be much lower, it's not, usually a bit higher around here. Or are you saying the local butcher is even more nefarious than the supermarket?

The grocery chains do very nicely thank you.
Mick

At the points in the cycle where they do great it's on turnover (people coming into the shop and spending), not margins.

 

[mullokintyre]

I'm not sure what your point is? All I am saying is it's dumb to compare differences between farm gate price and the retail price and conclude that the supermarket is nefariously gouging.

my point is that the farmer is quoting his farm gate price, i.e. the price he gets after all his inputs.
It is the equivalent of the retail price.
if you want to compare apples with apples, then you need to compare the gross margins of both.

I personally think it's not very inrelligent to quote gross margin for a grocery store as the indication of anything. Or per your next point, not very inrelligent to look at the average across the range vs the specifics for the meat, which is why I pasted that specific article.

If you go back and read your own post, you were the one who said gross profit for the meat was 2%, and posted a link to an article that you intimated supported that comment.
I went and read the 15 year old article you linked, and could not find any mention of a 2% gross profit.
I will happily stand (or sit) corrected if you can show me where it is.
The closest i could find was Woolies saying they get 1.70 per kilo gross margin.
It also states that the live weight per kilo farm price at the time was 1.68.
Depending on lots of variables, the live weight converts to about 65% of the live weight, so to compare apples to apples, that equates to 2.80 carcass weight.
If the farmer is only a beef producer, then all of his costs are going to come out of that 2.80 per kilo.
he has no loss leaders, no home brands etc to spread his costs over.

Obviously. But the margin they make on meat is closer to the average than some margin machine for supermarkets, otherwise the price at the butcher would be much lower, it's not, usually a bit higher around here. Or are you saying the local butcher is even more nefarious than the supermarket?

How do you know the margin on meat is closer to the average?
D o you have anything to back it up?
If it was indeed true, then the margin would be closer to the 26 to 30% margin that is quoted in the intelligent investor article.
As someone who raised cattle for a few years, I can tell you that the gross margins for the farmer is even in a good year is less 10%, and in some years you make a loss, especially if buying store cattle to raise rather than breeding your own.
Mick

 

[frugal.rock]

Don't know who you gobbing with Mick, but I'm on your side. ?

 

[Dona Ferentes]

Don't know who you gobbing with Mick, but I'm on your side. ?

It's WorkExperienceBoy.

 

[rcw1]

Good afternoon
The best and cheapest beef is your neighbours … ha ha ha ha ha

Kind regards
rcw1

 

[frugal.rock]

The best and cheapest beef is your neighbours … ha ha ha ha ha

You can have the old cow...

 

[eskys]

You can have the old cow...

View attachment 158277

That's tough, young meat better

 

[farmerge]

I actually see this all the time, even in supposedly economically literate people, thinking that airlines/petrol stations/supermarkets are price gouging them when you can see the profit margins for all those industries are super low, usually well under 5%, consistently.

From memory the net margin on a litre of petrol for a petrol station is something like 2c/L.

Well one of the local servos near us is making more than 2c a litre We have a fuel card which gives us unlimited litres at a discount of 4c. Plus there is an 5c litre up for grabs, if we go on line and tell them how good they are. The other servio has a similar set-up, and all this when the fuel all comes from the same place.