Visit from the President

[Wingnut]

KPP ... "I" think that a farmer is definitely a small business owner. I just don't happen to think that they're treated as such. Non-farm business owners sink or swim - mostly on their own - with little sympathy from anyone ... not at all the way farmers are treated.
I hope I'm not appearing anti-farmer ... my point is that farming WAS a lifestyle ... but NOW it's a business ... but not treated completely like a business. When's the last benefit you saw for Joe mom-and-pop-shop who's losing the family store?
Yeah ... you have a point about what you're paid ... so does the rest of the crowd involved in the "you want fries with that?" crowd. The trucker also has expenses, so does the broker, the MickeyD owner has to pay MickeyD plus pay that youngster (or oldster) and still sell the fries for a loss (Biggee Size or Super Size or whatever). He's not selling your spuds ... he's selling your spuds that have been delivered, peeled, deepfried, seasoned, packaged and handed over with a plastic smile. Obscene profit? Maybe by MickeyD ... but how about the individual franchisee?
You want to make the $6.00 a pound that they're charging for your spuds? OK ... build a store, hire people, advertise to the degree that people equate orange with MickeyD instead of Kubota ... and maybe you'll make money ... or maybe not.

On your comments about the Fortune 500 companies. I happen to agree about the obscene salaries those guys make (more so, sicne I wotrk for one) ... but you think they're different? I remember wondering why we'd sell something under the cost of production myself ... terrible business model ... but somewhere, somehow, it is written that market share is worth something. I don't happen to believe it ... but then I don't happen to understand how you can sell a business and have a certain amount of proceeds based on "good-will". Of course, if a company keeps selling for under the cost of production - for whatever reason - they'll soon go the way of the Internet startups and the DoDo Bird ... extinction ... and Willie Nelson won't consider a benefit for them. Run a farm into the ground and your family suffers ... run Enron into the ground and, apparently a lot of families suffer.

You don't like middlemen? Well, neither do I, but they certainly abound ... and seem to serve a need. They aggragate when supply is fragmented, and also perform the reverse. You don't buy your fertilizer directly from Monsanto or whomever ... you buy it from a wholesaler or, more likely a retailer. You want to eliminate the middleman ... well, either you get big enough to completely supply Safeway ... or form a co-op so you're big enough to supply Safeway ...

Almost finally .... I get experience too .... but that doesn't help me stay ahead of my competition ... all those young guys getting out of college with all the new techniques and lots of book-larnin' ... so I gotta spend time and non-reimbursed money to keep myself better educated than my peers. Besides ... experience is just another way of saying "I served my time" .... "good experience" now (but who gets to define "good?). And I get to work 365 days/year minus whatever vacation I don't want to lose. Spend weeks away from my family whenever someone wants to meet in Holland or Brazil or Thailand ... all the while building up my little patch of ground so I can enjoy the farming lifestyle when I retire.

Finally (thought I'd never get here?) ... again ... I'm not anti-farmer by ANY stretch of the imagination ... I'm just in favor of balanced viewpoints. There are at least 4 sides to every story.
(ps ... nor anti-KPP !!)

 

[PitbullMidwest]

KPP,

I agree with your theory but wonder if things would turn out as suggested. The lettuce shortage should be a small test to see if the grower really will benefit from a reduced supply and skyrocketing demand. Something tells me they won't.

 

[Wingnut]

Richard, Richard, Richard ...

Sorry I hit one of your sore spots ... I think we went around on this one once before.

I won't spend a lot of your time on this ... just throw out some food for thought.

Although the middleman certainly adds to the cost ... they do not control the market. Case in point ... lettuce prices have gone through the roof ... what happens? Well, me and my fellow lettuce eaters decide that we're not paying $3.50 for a head of lettuce no matter how short the supply is .... and suddently the price goes down as new production starts the meet the lower demand.

Greed? Hmm ... ok? But most are looking for a fair return on investment, as far as I've ever seen. Once that spud farmer sells his stuff for ten cents a pound .... what happens if the produce truck breaks down or the teamsters union goes on strike? Spuds spoil, farmers got his money ... teamsers settle for more money ... and the broker, middleman, whatever tries to collect insurance? Does he get $6 pound from the insurer? Not anywahere that I've ever seen.
I really have no idea what the average broker makes - profit wise - but I do know what big manufacturers consider a fair rate of return for production. "Better than the cost of investing meney". In other words, they'll only approve a project if the return is better than leaving the money in the bank (assuming they have any). It certainly isn't the profit that the real bad boys - the utilities that REALLY have the government in their back pocket - make.

Actually ... I don't know a lot about Cargill or any of the grain marketing here ... I'm more conversant with grain and beef marketing in Canada ... but I'll tell you what disturbs me a lot more than those guys .... and that's the companies that are eliminating the middleman ... AND the farmers ... by staring or buying farms themselves ... and usually using my tax dollars (via tax breaks and other cporporate welfair) to break the average farmer. To me ... there's the real bad guy!

Again, Richard, you know much more about the situation than I do .... you're closer to it and see more of it .... I can only go by my personal experience - which is with farmers that have made significant money over the years from set-asides, subsidies, insurance claims and other means . And by no means do I think they're the norm (or the only ones).

Me, as I said in my original message, I'm in favour of family farms and looking forward to - someday - spending most of my time on one.

Sorry again for tweaking you ... you should know by now I like discussion and dislike hurting people ....

 

[Egon]

Well said.

Egon

 

[cowboydoc]

Wingnut,
Oh gosh by no means did you tweak me. I was just presenting the other side of it.

Put this another way. What other company do you know of as a middleman that makes an average of about 600% profit margin from the wholesale product to the market? There is the problem. The farmer anymore has no control at all over his product. Like has been said you agree to the price or you don't. I was personally on hand when a friend of mine was talking to Pioneer for his seed corn. The guy came out gave him a price and Jack told him that's less than my costs even with the govt. money. The guy told him so what that's my price take it or leave it. If you don't like it Cargill will give you two cents less than we are. That's sad to me and completely unfair. The govt. has allowed the grain conglomerates to merge and form only a couple markets where there used to be dozens.

With regards to the govt. paying farmers I think that's a joke as well and I completely agree with you there as do most farmers. For the most part though what you see, or around here anyway, are family farms that are just trying to hang on. Yes there are your corp. but they are nowhere near the number of family farms left. The way things are going though there aren't going to be any left.

 

[Anonymous Poster]

Wing, I wish to say, I never thought you were anti farmer at all.

Market share.. good point. Except, as far as the North American farmer is concerned, they HAVE the market cornered... a 'monopoly' if you will, on FOOD. Most everything sold for the basic foodstuff to stay alive, on this continent, was GROWN here. Yes, there are the odd rarities such as bananas, and of course, commercial fisheries... but farmers have market share sewn up.

I merely believe, if you speak to any person owning say, 200 acres, and using a figure I found elsewhere on this board, $4000.00 USD for one acre of tillable land, assuming decent fertility.. (thats $800,000 in assets for only his/her land btw) and ask them if they FEEL they are getting a fair shake for feeding all the USA/Canada/Mexico, that they would answer no. Most 'farmers' aren't farmers at all, anymore, they are employees of agribusiness, as you pointed out. But you see, farming as a lifestyle is NOT a suitable business model ! Not with the present systems in place... and the reason for this is, inheiretence taxes practically destroy the chances to keep a family farm in the family, so that land gets sold to cover the taxes.. property taxes for 'raw' land only cleared for cultivation that in some places are simply astronomical. Therefore, these agribusiness corps are doing QUITE well, and they MAKE the market move as they wish, since their conglomerate not only sells the seed, the herbicides, pesticides, but they also have interests in the buying of the harvest.. or perhaps another conglomerate has no land, but has interests in the seed company, the chemicals, and buys enormous amounts of crops.

Point being.. Intel can sell to whom it freakin pleases (yeah I saw the censored in my previous post.. all I typed was d*amned) and Dell, Gateway, and the other PC makers can go suck eggs. Farmer Brown is STUCK. He can't sell his taters/beef cattle/apples to anyone but the commodity brokers. THEY are the real wholesalers, NOT the producer of the actual crop.

Food is considered by most, to be one of the basic needs in life, for absolute survival. All that infrastructure needed by Mcdonalds merely contributes to the END price, not to the actual WORTH of the product, with the single exception of cookin it. Yes, there is a HUGE amount of jobs/employment and so on, to support that order of fries (would you like a hot apple pie with that?) So my question is.. what happens if we just cut OUT that middleman between Mcdonalds and the hypothetical Farmer Brown with 200 acres of taters... maybe Farmer Brown would be able to make a good living as an independent and family farmer, passing his land to his children along with the traditions and knowledge gained.. (assuming taxes are somehow lowered or made reasonable) as well as, Mcdonalds might be able to cut the cost of aquiring said taters, thereby reducing the price to the consumer. Of course, since we're doing this, we HAVE to eliminate all price supports, and govt friggin interference. Believe me, I have WORKED for the Fed gov.. we had a standing joke:

What is the single biggest lie ? "I'm from the govt, I'm here to help you"

Anytime you involve a bureaucracy, it tends towards self sustaining, self perpetuating, useless entropy. This is true whether we are speaking of a governmental entity, or a huge internal corporate structure. There WILL be people that will send your forms back, because you did not give an email address... whether or not you have a computer.

I think, Wing, we are on the same page.. but spouting different rhetoric. I want no part of govt subsidies, nor price supports nor protection. Hell, right now, China can grow, export and sell their apples all over the USA for less than what I spend to spray my apples with Surround during a season. I won't go into the obvious political ramifications, but one bite of MY apples, is all it normally takes to sell 5 lbs. However, for the vast majority of this continent.. or even my own living area, there is NO chance to compare.. the chinese apples are killing all the apple growers in Washington state.. so I make my entire crop, specialty apples that we remember from childhood. Cider, the RIGHT way, not the pasteurized homogenized, de-taste-ized crap they sell at Safeway. Heck, I even give lil bits of yeast for personal fermentation experiments, and vinegar mother acetobacter for apple cider vinegar.

My business model WORKS, because where I live, there is enough older folks to recall what real apples tasted like, what real cider was like, and letting cider turn hard, on that first frosty night when you let Mother Nature distill your cider into apple schnapps. I sell bakin apples (everything EXCEPT granny smith) because real dessert apples have that unmistakable tang... that granny smith lacks.

And you're right btw.. in order for you to keep up with these young people exiting college with their eager little smiles, you had best keep up your education.. just as a farmer dang well best keep up his experience in planting schedules, watching the weather, determining when is best to spray, watching his weed level, sprayin for critters.. maybe it does not sound equitable to you, but I assure you, each time he made a mistake, it cost him, and he WILL remember.

Farming IS a business, but no, it is NOT the same as designing software.. and the govt only cares about software if its Microsoft.. (ooops wait, Bush got rid of that lawsuit) whereas they have NO choice, regarding food. If the crutches are yanked out, from the farmers support, without a commensurate elimination of artificially low returns on investment, then we ALL starve.

Oh and yes.. that also means a hell of a lot of people lose jobs. This has been building to this final point, for more than 70 years, and has become exponential since the late 1960s.

So, Wing.. what do we do? We cannot lose the subsidies, unless we eliminate the low prices too. We cannot lose the low prices for harvested crops, without basically gutting several large multinational agri-conglomerates. Monsanto may not sell me the fertilizer.. but they make it.. and they own stock in the companies that would buy my apples. I asked, they do.

And finally (ditto your comment) I really agree with you.. I wish we COULD go back to family farms.. hard work gave good returns and we fed our kids and raised em right and pretty much ignored everything outside our community. Those days, however, are gone. Our population exploding, our tillable, arable land, shrinking, and thousands of family farms going to either real estate speculation, or agribusiness farms... I just don't see it happening, rather, the opposite. When I was very young, I recall my great aunt in Macomb Illinios getting a sign to put on her fence, *Heritage Farm 100 Years* for having a farm that was in the family for over 100 years. She threw it away and said, if I can't sell my cattle for what it cost to raise them, why even put the sign up?

Two years later she sold the majority of her acreage to Western Illinois University. Now, there are empty dorms where cattle used to grow along the crick.

 

[Anonymous Poster]

That's just it Pitbull.. it probably won't. Too many folks would have to plant just to stay alive themselves. Sure, they could plant a garden and eat it, raise a calf for beef, but they still have to pay taxes and other stuff, insurance, gas for the truck.. just no way someone can simply STOP.

As for the lettuce situation, I doubt very seriously, whether the grower is gonna see a dime, but I will bet you a C note, you and I will pay more for it.

Wait.. I grow my own.. ok YOU will pay more for it

 

[JoeR]

How much is too much profit? Especially, when these companies are forming a monopoly or duopoly, etc... If you can't compete you buy out your competition and control the market. Then the controlling party becomes politically influential and makes sure that the government does not interfere with their plans. If you can't buy out your competition, you sign an agreement with them and once again ensure you have control of your market. Reminds me of the drug gangs that take over street corners...


Joe R.

 

[Wingnut]

Richard ... it's so hard to separate content and emotion from a posting ... I did really think I'd annoyed you ... glad it wasn't so. No wonder these flame wars start, huh?

I guess my major problem with this topic - as presented so far - is I have never seen these figures before. Yeah, I'd certainly agree that 600% is "excess profits" ... but I have no way of validating the 600%. I can remember from my beginning-to-work days when I drove a forktruck in a Sears warehouse in Edmonton ...an d how horrified I was to see the 100% markup on the items I was moving around. 125% on the baby stuff like cribs.
It was a long time before I understood what a markup was and all of the inputs that went into it ... and finally realizing that Sears considered 5% profit a big deal.
Does the 600% profit already exlude the cost of those elevators, transport, etc, etc, etc.
My world is a little different ... I buy FOB and sell delivered due to regulations and to product stewardship issues ... so I have a bit of control over the transportation costs ... but man-oh-man ... do those costs ever increase the product price ... and all I sell is raw materials. And I have to deal with middlemen ... because the cost of selling to you would increase your cost to the point you'd be shopping elsewhere. The middleman stores my products, breaks the tankcar or tanker truck or truckload loads into consumer sized lots to sell. He has to track whom he sells to and report that to the government. He has to ensure that all the containers that he sold are accounted for so that the EPA doesn't shut him down. It's very seasonal ... and tied to both the economy and to the weather ... hmmm ... sorta sounds like farming.
Cargill ... well the only thing I know about them is they're competing with the Canadian Wheat Board, and other countries that more directly sponsor or subsidize grain sales. They spend an inordinate amount "advertising" and they sure have a huge budget for research .... I'm not raising my hand in favor of enhanced grains (nor am I against it) ... but the seed they're trying to perfect is not so they can own the world ... it's so that the product grown and harvested by the farmer is more likely saleable. It seems to me they're every bit as tied to good weather, bad insects, blight, rust, etc as the farmers are.
Finally ... I'd say that this is actually the worst crop we could be analyzing - KKF's apples might be far better. The reason I say that is that grain "farming" is so far away from ranching, mixed farming and small crop farming as it's possible to get. Yes, the price isn't always good ... but even with huge farms, the work involved is minimal ... and the risks are so often covered - in large part - by insurance. I know way too many grain farmers in Canada ... and my brother-in-law is a bank manager in a completely Ag area ....

 

[Chuck52]

The real numbers in these discussions <font color=blue>are</font color=blue> pretty hard to tie down. Does anyone see an analogous situation with gasoline prices? At least here in mid-Missouri, there appears to be absolutely no competition on gas price. Every station in my area makes price changes in lock step. What's this got to do with food prices, besides the obvious energy cost to produce food? Well, in our society, gasoline has become a necessity, just like food. This is true for energy in general, whether it be electric or natural gas, or whatever. Except for those few souls who have managed to live "off the grid", we are at the mercy of energy monopolies. In the case of farmers, the commodity purchasers have formed near monopolies, and now control the prices they will pay as well as what we pay for them. Food, energy, healthcare... the free market has trouble dealing with some of these, and governments can obviously screw up any "adjustments" they try to make to keep the masses supplied.

Chuck