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Recently Hormel Foods Corporation announced that they would implement a 4.5% - 6.5% price increase on all the companies' non-refrigerated packaged foods, which are about 18% of their total sales. Reportedly, the USDA's index of livestock products was up 29% in the last year. These rising raw-material costs are causing Hormel to increase their prices to keep their profit the same as it was before the increase. Most likely other big food companies such as General Mills, Kellogg, and Kraft will follow suit.
Looking at this from the standpoint of Hormel, the price increase is fairly understandable and absolutely economically necessary. In individual markets such as the food market, changes in technology, taxes, prices of other goods, or in this case, prices of resources, can affect the supply curve. When resource prices increase, as they have in this situation, production costs increase which in turn causes the overall profit to decrease, because it now costs more to produce the product. The way to counteract this change in the market is for Hormel to increase their prices to balance out the supply and demand...