Gf - The way I see it is that part of the problem is that he is half right. Farmers
produce and sell in a perfectly competitive marketplace, but the buyers don't operate
that way. In other words, buyers are also empowered by the fact that they can find
willing sellers at extremely low price points. The justification for single point
purchasers (or double point - JBS, Excel) is always economies of scale, which at some
point can only be justified by ignoring the externalities of the business (offloading
hidden costs on society). This is true in more than beef.
There are some farms working together to market (eg: Grain marketing clubs, prairie
heritage) but in a lot of cases they are pursuing markets that the big buyers have
overlooked, or simply command a volume premium (transactional cost reduction) rather
than adding product value.
The solutions could be several - one direction - increase number of buyers - this is
tough in the current environment (speaking as someone who once owned part of a packing
plant.
Another direction - reduce the number of sellers - I initially was thinking of
marketing boards/clubs, but this is also happening naturally by attrition
Another option - choose to do something totally different - see Gaucho, Randy and
yourself as examples.
produce and sell in a perfectly competitive marketplace, but the buyers don't operate
that way. In other words, buyers are also empowered by the fact that they can find
willing sellers at extremely low price points. The justification for single point
purchasers (or double point - JBS, Excel) is always economies of scale, which at some
point can only be justified by ignoring the externalities of the business (offloading
hidden costs on society). This is true in more than beef.
There are some farms working together to market (eg: Grain marketing clubs, prairie
heritage) but in a lot of cases they are pursuing markets that the big buyers have
overlooked, or simply command a volume premium (transactional cost reduction) rather
than adding product value.
The solutions could be several - one direction - increase number of buyers - this is
tough in the current environment (speaking as someone who once owned part of a packing
plant.
Another direction - reduce the number of sellers - I initially was thinking of
marketing boards/clubs, but this is also happening naturally by attrition
Another option - choose to do something totally different - see Gaucho, Randy and
yourself as examples.
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