On Fri, 21 Jan 2000 00:31:16 EST, HLPizza@aol.com wrote:
>Today in a meeting with Congressman Earl Blumenaur about farming and free
>trade, I said that farmers get 5¢ for raising the wheat that goes into a box
>of Wheaties while Tiger Woods gets 10¢. It really stopped the congressman
Don't have the source, but the numbers are believable. The wheat
farmer, however, is producing a COMMODITY. Mr. Woods is not.
Commodity producers, be they producing wheat, gold, oil, gravel, fish,
timber, or copper, are almost always price *takers* not price makers.
It has been that way for millennia, and is unlikely to change any time
soon. Substantial profits generally arise only when there is no readily
available substitute for the product being sold, and last I checked, we
were up to our collective armpits in Hard Red Winter wheat. Needless
to say, any one truckload of HRW can substitute pretty easily for any
other, so we shouldn't be surprised that the profit potential sucks. No
connection to trade here that I can see, as the US is exporting wheat,
which actually increases the price to the grower.
Turn that same commodity wheat into a recognised brand name product
(few substitutes there), promoted by a famous and uniquely talented
athlete (few substitutes there, either), and suddenly you've got some
substantial profit potential, for everybody but the commodity producer.
Farmers who produce commodities, which are by their nature
standardised, can only compete on price. If you're going to be in that
market, you had better figure out how to be one of the lowest cost
producers in the business or you've got a serious problem.
That's what gets both farmers and industry/government types into the
"Get big or get out." frame of mind that has been so destructive to
rural society and culture.
I think that (at least for a lot of the farmers I work with) there is a
third option, Get *better.* "Better" in this case meaning more
sustainable, more professionally managed, more creative in cropping
mix, more creative in marketing, and so on. Getting better would
appear to be a lot cheaper (and more effective) than getting bigger,
and a whole bunch more fun than getting out. To my mind it is the
*only* path that can reverse the current devastation we see in the
heartland.
Government money and intervention is unlikely to help. I'd even go so
far as to say that government money is a large part of the problem, and
has created a generation of farmers whose relationship with the
government is one of dependency bordering on servitude. Governments
have a long history of fighting the market. Especially in the case of
commodities the market almost always wins sooner or later, but usually
not before the government has wasted huge amounts of money in what is
ultimately a fruitless effort.
As an interesting coda, the federal government now absorbs 36% of our
national output. In the era of feudalism the manor (with its system of
defence and administration for the serfs) usually took 25% or 33% of
the output within its domain.
It may seem a long way from a guy who can hit a 9-iron 200 yards with
great accuracy to the taxation rate on a mediaeval manor, but that's an
important part of the big picture in which the commodity producer has
to function.
Bart
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This archive was generated by hypermail 2b29 : Sun Feb 06 2000 - 12:00:23 EST