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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.

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.

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.

They will also sell my factory and production equipment to pay those federal estate taxes.

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.

What you say would be valid if government interference did not distort normal market forces. This is Reality 101.

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.

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.

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.