Much of the cost of fresh produce and meat is to cover the costs for product that spoils or gets damaged in transport. Processed foods are baked, canned, cured, injected with preservatives, etc. that prevent loss from spoilage. Additionally, the best looking, most perfect product is sorted for sale to consumers while the uglier, misshapen, etc. can be used in prepared foods. Lower quality meats can be ground and mixed with fat to reach desired ratio or injected with marinades, etc. to tenderize them. And ultimately the costs to process foods are small because of the huge economies of scale involved.
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