If sugar costs $1.70/kg, but takes 100kgs of sugarcane and over 2000L of water to produce that 1 kg, how is the end product profitable?

Question

If sugar costs $1.70/kg, but takes 100kgs of sugarcane and over 2000L of water to produce that 1 kg, how is the end product profitable?

In: 300

Answer 1

Economies of scale.

Making 1 of something completely by your self is incredibly costly (see How To Make Everything BLT sandwich [https://youtu.be/URvWSsAgtJE](https://youtu.be/URvWSsAgtJE)). In that case $1500 for a sandwich. But for in the same amount of time and with only a slight increase of initial cost and effort to make that 1 sandwich they could make 100.

With crops like sugar cane the actual cost per cane to grow and process into that single canes worth of sugar would be astronomically small, because it’s being spread across hundreds of millions of plants.