From: James Rogers (jamesr@best.com)
Date: Mon Mar 27 2000 - 12:08:12 MST
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.
-James Rogers
jamesr@best.com
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