freediver wrote on Jun 9
th, 2015 at 6:21pm:
It is possible if they make the same accounting mistake year after year, but the bottom line is, businesses pass on all their costs. The fact it is totally opaque to the end customer does not change this. It is even opaque to the business itself that passes them on. If they failed to pass on all their costs, they would be out of business. It is meaningless spin to say one particular cost is somehow exempt from this.
Yes FD, overall sales will have to be worth more than overall costs - otherwise the business will go broke. But that is not the same thing as saying that all costs are definitely passed down. For example certification costs could change the end profit of a given product from (say) $10 to $9 if the cost is not passed on. There are many reasons why a business would accept this sort of hit to their profit - market share, remaining competitive etc. The point is, if the business is efficient and profitable enough to start with, they can afford to be burdened with additional production costs without impacting the end price.
Let me spell it out for you FD with a simple example:
- product x sells for $20 - and the profit for the producer is $10
- the producer takes on a new production cost which works out to be $2 per product
- this new cost enables the producer to enter a new market - increasing his overall sales
- the producer makes the strategic decision not to pass on the new production cost - reducing his profit margin from $10 to $8 per product
- he does this because he considers that increasing the price by $2 would make him uncompetitive
- but the payoff is an anticipated surge in profits - even above his previous $10 - that comes from increasing his market.
You can replace "product x" with "halal certification" - though of course the cost would be infinitely smaller that this example.
freediver wrote on Jun 9
th, 2015 at 6:21pm:
It is the abattoirs that pay the extortionist fees. Coles would have no idea how much of this is passed onto them, and how much onto their customers. One Queensland abattoir recently withdrew from a large sector of the export market on account of the fees being unaffordable. Anything that affects the market that drastically will influence every player. Even local Halal certification suppliers are complaining about the dodgy practices.
FD's up to his old tricks of focusing on one isolated example related to the beef export market to Indonesia - pretending that he doesn't know that we are obviously talking about the domestic market.