We had just finished dinner, and I was getting ready to throw away the bag of rice, when I noticed the labeling on the back. (Click to embiggen.)
If you can’t read that, it says “Best before 01/09. Made in Canada.” However, just below that, it says, “Uncle Ben’s Ready Rice uses premium rice grains grown in the USA.”
Now, I did some research, and the primary rice-producing states are Texas, Arkansas, Louisiana, Mississippi, Missouri and California. That means that the rice in this bag was produced in the southern part of the U.S.
And that’s where it gets ridiculous. The rice was apparently then shipped north to Canada, where it was packaged. Then it was shipped south again to the U.S. to be distributed and sold.
Am I the only one to whom this makes no sense whatsoever? Isn’t it a little bit insane to grow and harvest the rice here, and sell it here, but ship it thousands of miles north to be packaged between harvesting and selling? Even if the labor and materials are cheaper in Canada, it seems to me that the fuel costs of getting it there and back again are being transferred to us in some way, especially nowadays.
I plan to follow up on this story. This… This is what Pulitzers are made of.
July 21st, 2008 at 1:31 pm
Whether quoted by P.T. Barnum or David Hannum, the sideshow to which “There’s a sucker born every minute” applies is actually our free enterprise system, no part of which has anything at all to do with value.
July 21st, 2008 at 3:48 pm
This reminds me of when I learned that most oranges grown in Egypt are exported to Europe - and the oranges for sale in Cairo are imported from Spain. I have yet to hear a satisfactory explanation for this, and look forward to your upcoming report!
July 21st, 2008 at 6:16 pm
Montucky: well, there’s value somewhere, I’d wager. It’s just that none of that value is getting transferred to you or me.
July 21st, 2008 at 6:17 pm
Heidi: that is simply mind-boggling. Seems to me that a entrepreneurial orange-seller in Cairo could make a killing by avoiding import charges and simply selling local fruits.
I fired off an email to Mars, Inc. I’ll let you all know what response I get.
July 21st, 2008 at 7:52 pm
This has been happening ever since an oil based economy made traveling cheap. Even today with $4+ a gallon, it’s often cheaper to ship massive amounts of a raw material to another location for manufacturing, packaging, etc., than it is to build distributed manufacturing facilities in multiple locations.
A phrase that captured this phenomenon was the “three thousand mile caesar salad,” referring to the distances that all of the ingredients had to travel in order to make it.
July 22nd, 2008 at 8:31 am
No this isn’t insane at all, its business, and America isn’t the only place receiving the Uncle Ben’s Ready Rice. Theres a chance that Canadian grown northern wild rice shows up in that bag too, but the main product Uncle Ben needed to produce the product he wanted to produce grows in southern USA. People buy and ship things all the time, its called commerce. I can almost guarantee Mars uses rail cars too. Vastly fuel efficient.
July 22nd, 2008 at 8:50 am
akoumjian: I had heard the phrase “three thousand mile caesar salad” but never really thought about its origin. Reid brings up two valid points - it’s sold elsewhere other than only the US, and they’re probably using rail cars.
I still can’t believe that it wouldn’t be cheaper to package it closer to its main distribution points, however. Of course, I’m no economist, either.
July 22nd, 2008 at 9:00 am
nice list, thanks for sharing.
July 22nd, 2008 at 9:11 am
It gives a job to the farmer, the person who loads it on the truck, the truck driver, the person who takes it off the truck, the multiple people who package it, the people who load it on another truck, another truck driver (actually several), the stocker, and the cashier. To every evil there is a hidden good.
July 22nd, 2008 at 9:12 am
The only reason oranges would be imported and sold into Europe from Egypt is because of the demand. Egypt can sell way more oranges in Europe than it ever could in Cairo, and the more they sell, the more money they make. Even with export taxes, shipping costs, rot loss and preservation costs, they still make more money than if they sold in Cairo. Same goes for Spain. Theres a bigger demand for Spanish oranges in Cairo. The real question is where does Spain get its oranges from… probably from Europe haha.
July 22nd, 2008 at 10:14 am
Stephen: sure, it gives all of those people a job. But I don’t believe that figures into Mars’ cost analysis when they decide to ship to Canada. No large corporation would do something like that just to employ people.
July 22nd, 2008 at 12:03 pm
…but minimum wage is way higher in every Canadian province than it is in any of the States. that’s what’s REALLY confusing,
July 22nd, 2008 at 1:13 pm
Not that interesting. They wouldn’t do it if it wasn’t cheaper. It’s not Pulitzer-y at all.
July 22nd, 2008 at 1:19 pm
This is, by definition, “globalization”.
The advent of cheap shipping enabled the industrialized economies to utilize economies of scale to globalize the production of goods.
I know you’re sitting here saying “but it’s so inefficient!” but it isn’t, not really: the cost savings of manufacturing closer to the farm would likely be pennies per unit, and the profit margin (and marketing costs) are far far higher: there’s no benefit to it.
The part that SHOULD get you upset about this kind of thing is the POLITICAL ramifications. Americans are famous for this: military contracts where parts are drawn from each of the 50 states to go into the new item so no politican will vote against it lest they lose jobs in their own constituency. Here’s a similar example: “grown in the USA” to satisfy the Americans, “Made in Canada” to satisfy the Canadians and other market conditions, etc.
As for the labour costs?
At the end of 2003, the Canadian Dollar was worth about 70 cents on the US dollar. Meaning that a $5 US minimum wage would have to be $7.15 CDN to be on par. Factor in the cost of US health benefits, the arrogant extravogance of US unions, and the fact that the manufacture of the final good might be done by a third party who submitted a lower bid and you arrive at the conclusion that “geography has no meaning”
July 22nd, 2008 at 1:34 pm
As a Canadian similair stuff ticks me off…
Our dollar is on par (give or take a 10th of a cent ) and many bookstores still try to charge the “Canadian” price on books - often twice the cost.
the ironic thing is (of course) that these books are mostly printed in Canada.
July 22nd, 2008 at 1:47 pm
This is indeed globalization, I suppose, but in a form I haven’t really paid attention to. I read The World is Flat by Thomas Friedman, but other than the farming out of information technology, I guess the real-world applications didn’t sink in for me. Obviously there’s a cost benefit in this or Mars wouldn’t do it, but what’s annoying is that it’s quite likely that the benefit is only for the corporation, and not for the consumer.
And stark: you’re absolutely right about the political ramifications of this. That’s another post, I’m thinking.
July 22nd, 2008 at 2:35 pm
This isn’t globalization. It’s globalism. It’s an interdependency cult monkey wrench thrown into the gearbox of the local economy.
I’m not saying it isn’t cheaper to produce products elsewhere. I am bothered by the fact it’s impossible to make a decent living independently in many markets because you have to be attached to the larger machinery of commerce along with all its neuroses.
July 22nd, 2008 at 3:27 pm
“Am I the only one to whom this makes no sense whatsoever” ok are you impling that your knowlegde of the costs in the rice products manufacturing industry greater than uncle bens (if so you just might be able to get a pretty good job.
You say even if it is cheaper. why even if it is cheaper. so you want to dictate that a business must operate.
however if your triing to sugest that the reason this is done is to get around regulations you might have a point.
I do find it funny that you make the statement that is doesn’t make any sense but you don’t even bother to try to make sense of it.
July 22nd, 2008 at 4:58 pm
You are not a journalist.
July 22nd, 2008 at 5:56 pm
To throw another bone into the pot, I would like to add that many developing economies export their best products to the first world, and keep the rejects for their own populations. An example: Sumatra and Java are famous in Indonesia for coffee production; however, all the best beans go to companies like Starbucks, leaving second-rate coffee for Indonesians. If you want to find a good cup of java in Singapore or in Jakarta, you have to go to high-end coffee shops, as the local markets sell only the swill.
Also, it is indeed possible to find Egyptian oranges in Cairo, but not in the main markets or shops. Local subsistence farmers, who drive into the city with their donkey carts, sell their produce on the sides of the roads on the outskirts of the city. The well-heeled and middle classes buy oranges from Spain (in the markets), while the desperately poor buy oranges from Egypt (on the streets).
Regarding global distribution, I offer the example of my husband’s recently-purchased Lenovo Thinkpad. It was made in Singapore, but he bought it in Ann Arbor, MI for 20% less than what he would pay here in Singapore. Additionally, customized options for laptops (such as Dell, where you can customize everything) are not offered here, even though most of the factories are in neighboring countries. The reason given to me by vendors: Singapore is a small market, therefore not worth the trouble.
July 22nd, 2008 at 7:01 pm
Matthew: Indeed, I wasn’t attempting to figure it out. I just thought it was humorous and didn’t seem to make sense from my perspective. I’m glad to see that you can infer things that I never mentioned from my original post.
Heegos: you’re absolutely right. I’m not a journalist, nor did I claim to be. The Pulitzer Prize remark was an attempt at what is often referred to as “humor.”
Heidi: just what we needed - another bone, eh?
July 22nd, 2008 at 7:30 pm
Wolf, I didn’t know our dinner conversation would turn your blog into a rant. Good luck moderating.
July 22nd, 2008 at 8:16 pm
Yeah - who knew? Good thing we weren’t discussing Kant’s Pure Reason or even Animal Farm.
July 22nd, 2008 at 11:06 pm
It’s shipped to Canada so that when they ship it back then can include illegal drugs, killer kindbud. It’s a well-known fact that the government buys drugs and distributes them at the School of the Americas back onto the street so they can continue to target minorities, because prison labor is the new slave labor. tinyurl.com/1mn
July 22nd, 2008 at 11:50 pm
Pullitzer?? easy boy, that´s how bussiness is made in the world and everyone´s know it.
July 22nd, 2008 at 11:57 pm
You Americans are all the same. “Even if the labor and materials are cheaper in Canada.” Just to let you know Canada is not India. Cost of living, labor and materials is pretty damn close to the U.S. Seems to me, this just typifies American ignorance. Plus we’re making money to ship you your own product. Not bad for us dog-sled driving, igloo building lumberjacks eh?
July 23rd, 2008 at 3:22 am
In the Netherlands we have lots of pigs. We stuff them into trucks to take them to Italy. That’s a long drive, and it’s not uncommon pigs start biting eachother, and dying in the truck. In Italy they kill them anyway, and cut them up. Then they get another big truck to take them back to the Netherlands (and other countries) to sell the meat as Parmaham. They probably get killed in Parma, so that’s what makes it parmaham. Just calling this commerce is not the whole story. These things grow slowly, and by the time someone doing commerce starts using his head, there are so many people en companies involved it’s hard to change something. In a marketeconomy the idea would be that the power is with the consumer, because you can choose the product you buy, based on what you know about the producing company, or even the country the product comes from. Unfortunately, IRL the power is with the companies, because consumers are just too stupid and lazy to think about what they want to buy. They have been made lazy by the post war economists. They came up with the idea that as long as we consume, and consume even more, the world will be a better place. check out http://www.storyofstuff.com for a refreshing look on this mater. So there is no ‘infrastructure’ to inform customers in an honest way about where products come from. Anyway, 99 % would probably go for whatever is cheap anyway, regardless of what has been destroyed to get food on someones plate. I bet if you would actually investigate this rice thing, you’ll find that somewhere in the beginning it was cheaper or easier to pack rice in Canada because of some law or tax reduction for American companies investing in Canada. And of course fuell has been so cheap over the past few years in the USA, I bet you can drive a truck all across the continent and still get your rice cheaper when it is packed somewhere else. Now finally prices are going up, but it is still far cheaper than it has been for a long time over here in Europe. That is probably also why it took so long for americans to wake up I guess. Lets hope things will change for the better, not just in the USA, but booming economies all over the world. I guess Western economy showed the world how it shouldn’t be done, so that new economies make the right choices. Thank god they don’t have a Marshall plan forcing them to invest everything they have into a single economic power. And thank god they don’t have a need for such a plan. Of course in the middle east the USA is trying really hard to repeat that brilliant plan, but I guess it won’t work there. Am I getting off topic here?
July 23rd, 2008 at 6:35 am
Wolf, I think you’ve solved the ‘lurker’ problem.
July 23rd, 2008 at 7:36 am
You are missing one of the things needed. In order to make the packaging, they need cardboard. One of the things Canada has plenty of is wood to make cardboard from. So it’s either ship the rice north, or ship the cardboard south.
Now, to ship rice, you just pour it into the truck, and pour it out at the end.
To ship cardboard, you need to tie it in bundles, stack the bundles, make sure they’re tied down properly, and then undo it at the other end.
With the low price of gas when the packaging factory was built, it was probably a lot cheaper to ship rice twice than to ship the cardboard once.
July 23rd, 2008 at 8:48 am
Adam: easy, easy. I think no such thing about Canada. I only assume they’re shipping it there because if it weren’t cheaper to do it, they wouldn’t do it. And if you guys make money on the process, bully for you! Careful about lumping “all Americans” into the same pot that you accuse us of lumping “all Canadians” into. Plus, I live in Alaska - let’s compare igloos!
Edward: now there’s an aspect that had slipped my mind completely. Guess I wasn’t thinking ‘outside the box,’ eh?
July 23rd, 2008 at 3:29 pm
That’s NAFTA for you … the company could be partially based in Canada and they would get nice incentives for bring some work to Canada.
I use to work for a bettery company and they would send all thier stock up to Canada in bulk where we packaged it for retail sale as well as miltiary contracts because the battery business busy during the year for 2 reasons, the American Hurricane Season and Christmas.
They would get nice cuts on the tariffs for us packaging all the products and also at the time we were cheaper to employ than our Southern counter parts, hence why we don’t mind having a dollar that is less than yours, unless were coming down to go shopping.
August 16th, 2008 at 8:05 am
if that’s an impressive piece of investigative journalism, no wonder our press is so fu@*ed…
September 21st, 2008 at 7:35 pm
I just got back from a trip to the Caribbean, where I noticed that the Red Stripe Beer I was drinking, which is made in Jamaica, first had to be shipped to Connecticut for labeling and distribution before it made it’s way back down into my hands just a hundred miles or so from it’s point of origin.
One does have to wonder when this type of thing is going to no longer be profitable. I think the world is going to become much different in the next 20 years.