In response to:

Want Milk?

Bernard83 Wrote: Dec 30, 2012 9:12 AM
control over those costs. He has no control over the selling price of his produce either. So farmers are dependant on the benevolence of the market to provide them with a wide enough margin to make a living and withe the investment in land, buildings, machinery, stock, seed and fertilizer not to mention time and labour, I am surprised we have any farmers at all. I certainly decided to earn my living in a field in which I could at least set the price for the products I produced. BTW I am self employed and involved in manufacturing and marketing.
FletchforFreedom Wrote: Dec 30, 2012 9:39 PM
I know several farmers who have done just that (albeit primarily corn and dairy farmers).
Bernard83 Wrote: Dec 30, 2012 1:44 PM
Well Fletch, I suggest you go buy a farm, plant some 'taters, then go try to sell them at the price you want.
I watch for your report here in about a year to see if you succeeded.
FletchforFreedom Wrote: Dec 30, 2012 1:25 PM
And in the marketplace, if the suppliers are not willing to provide potatoes at the price requested by the chip company, then the price rises as they have no alternative but to pay the MARKET price. This is how the market works. The notion (usually put forth about labor markets) that one side holds the power in price negotiations is unequivocal nonsense.
Bernard83 Wrote: Dec 30, 2012 11:35 AM
Daddoi. Who set the price for the potatoes? You or the chip company? You showed up at their door and said ' I want to supply you with potatoes next year my price will be $0.10/potato', and they said, ' If that's the price you need then OK. We have a deal'. Or did they say, 'OK. We are paying $0.01/potato and we need 5,000,000 potatoes. If you can guarantee delivery we have a deal.' If the cost of your fuel went up who sucked up the difference? You or the chip company that could have adjusted their price to the consumer? I'm betting it was you.
Daddio7 Wrote: Dec 30, 2012 10:46 AM
You never tried a contract? For years I grew potatoes and contracted with chip companies for a price high enough to cover production cost. Usually I had extra to sell on the open market to other chip companies or the fresh table market.

With the drought corn futures were high so some farmers in my area, North Florida, planted corn after they dug their potatoes and made a good profit.
Bernard83 Wrote: Dec 30, 2012 9:55 AM
They will also sell my factory and production equipment to pay those federal estate taxes.
Manny41 Wrote: Dec 30, 2012 9:50 AM
And Bernard, as a reward for a lifetime of your efforts, now that the estate tax is BAAAAck, upon your being called home to the Lord, your farm will be sold to pay the federal estate tax.
javapoppa Wrote: Dec 30, 2012 9:49 AM
What you say would be valid if government interference did not distort normal market forces. This is Reality 101.
FletchforFreedom Wrote: Dec 30, 2012 9:47 AM
This is why farmers engage in the futures markets to ensure price stability over the long haul (that some of the economically ignorant dismiss as "speculation". Using this widely used and available tool, farmers frequently set the price at the outset. You can check the prices on the commodity markets at any time and sell a contract for delivery at a given future date. One still faces the risk of crop failure, disease, etc. (for which insurance can be purchased) but price risk is easily dealt with in this fashion.
Bernard83 Wrote: Dec 30, 2012 9:38 AM
You are correct Fletch. But a farmer has to plant his fields in the spring, or in some instances, the fall. The harvest will be available months later. The farmer cannot predict what the price/bushel will be 3-4 months out but he is committed once he has spent the time and money to plant. His only option would be to leave the crop in the field if the price offered won't cover cost. In most industries if the price is too low the manufacturer can hold inventory or stop production and wait a bit for demand to increase. Farmers can't do this they can't instruct their cows to hold off on producing that calf and once it's on the ground they have to support it at additional cost.
FletchforFreedom Wrote: Dec 30, 2012 9:19 AM
You are quite correct that you could not "set" the price, albeit it is not "set" by buyers either. Prices come into being at the intersection of supply and demand - that point at which exchange is mutually beneficial. Each actor has control over prices only to the extent that there is a point at which the producer will not supply and a point where the consumer will not buy. If you could not meet prices it was because SOMEONE ELSE did a better job in the marketplace, so demonstrably it was not a market failure or the inability of efficient producers to find a market for their products that you experienced. This is Econ (and reality) 101.

December 22, 2012

“Were we directed from Washington when to sow and when to reap,” Thomas Jefferson wrote in 1821, “we should soon want bread.”

And milk, no doubt.

“Add another, more prosaic item to the list of things Congress has left until the last minute to resolve this year: the price of milk,” The Washington Post reported last Thursday.

Yes, it’s true; our glad-handing representatives are set to thrust us off yet another cliff — this time “The Dairy Cliff.”

A major piece of the colossal...