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14/08/2013 | Webreality

Blog.
The price of cheap bread

Bread

Jersey is an expensive place.

It's an expensive place to buy or rent property, to buy a week's shopping, to run a business.

For many years, the cost of living in Jersey was largely masked for most of the resident population by healthy salaries and almost non-existent unemployment. Prosperity bred prosperity. Sure, we all knew that things were pricey, but there was always the next pay increase and bonus to look forward to.

More recently, the lack of economic growth and the increase in unemployment has hardened consumer attitudes to the prices that our previously super-successful economy has long supported.

The latest bit of bad news on jobs, the announcement of the closure of the two large scale local manufacturing bakeries, has triggered another round of business bashing.

Some examples of public comments on the story at ChannelOnline.tv:

"Buy local, not likely when local businesses continue to charge high prices for their goods and refuse to try and compete for whatever business is out there."

"Health (sic) competition will always knock out the companies who are greedy."

"their greed has finally priced them out of the market"

"If competition is going to knock out the greedy ones then so be it."

It is a pity, if not surprising, that public discourse about economic matters is so poorly informed.

Here are some of the things that the typical Jersey consumer wants:

  • A generous salary and benefits package AND cheap food, booze and fuel
  • Cheap housing AND rising house values
  • A halt on all development AND cheap housing
  • Cheap stuff in the shops (when it suits them) AND cheap stuff online (the rest of the time)
  • Fantastic public services for an aging population AND no tax increases, ever
  • A thriving finance sector AND no GST
  • Low interest rates on their mortgage AND high interest rates on their savings
  • A thriving tourism sector AND cheap flights and ferries
  • More tourists AND less traffic
  • A thriving farming industry AND cheap milk
  • No more immigration AND economic growth...

Who wouldn't want ALL of these things?

The trouble is that sometimes the things we want are mutually exclusive, but, as human beings, we generally want everything.

We want to live in this beautiful place, with its tiny landmass and very limited resources, buzzing economy, low crime, limited traffic volumes (yes, really!), great schools and hospitals, etc etc... But we don't want to face up to the realities of supply and demand.

People want cheap bread. Supermarkets respond by importing bread from massive UK suppliers who bake 24 hours a day in enormous industrial facilities the size of the whole of the Rue des Pres Trading Estate, located on land costing a fraction of Jersey rates, using staff who are paid a fraction of Jersey salaries. So, Jersey consumers get cheap bread.

Meanwhile, at Rue des Pres, the island's only non-premium bakery tries to continue to compete against the cheap UK bread imports whilst operating on tiny Jersey volumes and high Jersey costs.

Surely it is evident that it was only a matter of time before this became commercially impossible to sustain?

People want cheap bread. People buy cheap bread. People lose only local large scale bakery. People accuse local large scale bakery of greed.

Go figure. 

"Greed" is too easy an accusation to throw at any business trying to make a reasonable profit, especially in an era when bashing business is very fashionable.

In this case, consumer behaviour has driven the supply chain change, including the loss of the local bakery. Perhaps it's satisfying to put the boss's head on a stick when the consumer has killed his or her business, but the human impact in the form of the job losses should give us pause for thought. 

We can't have it all.