From: Michael S. Lorrey (retroman@turbont.net)
Date: Mon Mar 27 2000 - 20:51:11 MST
Zero Powers wrote:
>
> >From: James Rogers <jamesr@best.com>
> >
> >On Mon, 27 Mar 2000, Zero Powers wrote:
> > > >From: James Rogers <jamesr@best.com>
> > > >You have a strange and rather arbitrary definition of "efficient" (and
> > > >"equitable" for that matter).
> > > >
> > > >That you will "never be convinced" suggests a position that is not
> > > >rational in its basis. In fact, dumping *is* more efficient and to the
> > > >benefit of *everyone* in the long-term than doing as you suggest. I
> >would
> > > >hardly call forcing a farmer to sell their grain at or below cost to be
> > > >"equitable"; it sounds like theft to me.
> > >
> > > I would say that *you* have a strange and rather arbitrary definition of
> > > "theft." I'm no farmer, but I'm sure that as between selling my grain
> >at
> > > cost and just dumping it for nothing, I'd much rather do the former.
> >Sure,
> > > I would *rather* sell it at a profit, but I would *not* consider someone
> > > offering to pay cost for something that I otherwise plan to just
> >destroy, to
> > > be a thief.
> >
> >
> >If farmers wanted to sell their product at or below cost, they would
> >already be doing it. Since the only way this will happen is through force,
> >it can be called theft.
> >
> >"At cost" is a strawman. The market would handle the situation just
> >fine if it was merely "at cost". Margins are generally quite thin so
> >it isn't a case of price gouging. Most of the countries receiving grain
> >get it free or substantially below cost. If they could afford to pay at
> >cost it would be largely a non-issue, since it would allow the producers
> >to stay competitive with people re-selling their product.
> >
> >Let me explain it again:
> >
> >If producers give away excess capacity below cost, it lowers the average
> >margin on the grain that they do sell for a profit, sometimes forcing
> >them out of the market. The short-term effect may be beneficial
> >(recovering expenses), but the glut of too cheap grain creates a very
> >negative long-term effect on overall production because it decreases the
> >effective market size from a producers standpoint. If the world worked
> >your way, the producers would quickly sink into unprofitability and
> >would shut down.
>
> So its just like OPEC. They are destroying produce to artificially inflate
> the price. Perhaps this indicates that there are too many grain producers
> and that society (and the grain market) would be better off if some of them
> *did* shut down? I realize that probably wouldn't go over too well for
> those producers that had to do the shutting down. But in general might it
> not be better than the collosal waste that current practice creates?
The thing is, Zero, that in an economy the size of ours (which a single
person cannot totally appreciate), a few million pounds of grain is the
sort of waste you will get merely because the system that is already in
place to discourage farmers from planting too much might be off on its
estimates by a fraction of a percent, or if the estimated rainfall is
off by a few percent.
A good comparison is to compare the grain production of the US with the
wood consumption of building a house. Most contractors and architects
will budget in at least 10-20% overage for wood that is waste cuttings:
its those ends of short wood that are useless, or wood that arrives with
splits, knots, warps, theft, etc.. Using the current wastage of the US
grain market, which deals with forces of nature that are far harder to
estimate for and control than a supply of well cut wood, the contractors
would have to improve their efficiency by a factor of two to four to be
as good and efficient with their wood.
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