Farmers are price takers...

[Stroppy]

Like a lot of other businesses that produce raw materials, farmers don't set prices. We take whatever the market will give us. One of the things I find so perverse about this business is that we're punished for doing a good job. If you have a good grain crop it's likely that a lot of other farmers did as well and the glut of whatever is on the market will drive prices down. The same applies to beef.

I realize consumer demand and the processing chain are factors in the equation, but when prices on calves, cows and fat cattle are down and the price of beef stays the same or goes up in stores you have to figure the difference is going into somebody's pocket. Gravey for the middle man. That's life.

Like Cowman is always saying (where is that old rascal anyway?) ya gotta run it like a business. All we can do is try and figure our input costs, guess at where prices might be, and decide if it's worth producing another crop.

[smcgrath76]

Just a thought for discussion...
It could be argued that the value of a commodity or any other type of item, is equivalent to what people will pay for it. Just because it may cost $30 to produce a widget does not mean that it is worth $30. It may only be able to fetch $20 in the marketplace.

The first question is, "do we want to be paid for the cost of production of our product, or for the value of it?"

The second question is, "is the value of our product equivalent to or greater than the cost of production?"

The next question is, "how do we add value to our product, or cut costs, or a combination of the two in order to make the widget have more value than the cost of production?"

This is a simplified version of life, but I won't profess to be an economist.