eli5: How come things like whole wheat flower and brown rice cost more than their processed counterparts?


It seem really backwards that foods that are processed more cost less. What are the reasons for this?

In: Economics

Imo, it probably has to do with the market. If more people want brown rice, then more companies produce it at X quantity, driving the prices lower. If less people want it, there’s less competition, they can keep their prices slightly higher. Also, need to factor in the extra production costs for managing another product.

It was probably much easier back then when everyone just wanted white rice. Now they have to account for different types of rice.

The demand for processed food is higher than the demand for non-processed food. When demand is high, supply must increase, or else the price increases. So food processors create machines and optimized processes that provide an economy of scale — it costs less, **per bag**, to create one *million* bags of processed flour than to create one *hundred* bags of unprocessed flour that requires an entirely separate production line.

Say you had one million grandmas baking cookies. Each cookie would be cheap, right?

But then over in one corner, you have *one* grandma handing out cookie dough. You haven’t even baked the cookies yet, so how can that cookie dough be more expensive than a fully baked cookie? Well, it’s because you have one million grandmas, just cranking them out.

Some is that lower economies of scale make it more costly to produce more niche products/ingredients. Those that care enough to consume a specialty version also probably want higher quality version, so it’s also a better quality of wheat that’s being chosen for processing as whole wheat. And some of it is marking it up as a premium good because of its supposed benefits vs. the standard version.

In addition to the other comments, I’ve also heard brown rice has a much shorter shelf life, meaning all the manufacturing timelines have to be compressed, and more bags are trashed due to spoilage.