Sunday, January 31, 2010

Market allocation

In a recent book review Robert M Solow,Nobel prize winning (1987)economist wrote, "Any modification of market outcomes modifies the allocation of incomes, wealth, status, and power. So it is no wonder that the discussion has become thickly encrusted with ideology."

In 2009, American dairy farmers received approximately $10.4 billion less than they received in 2008. Some allocation of income! For the most part the American public, in 2009, paid pretty much what they paid in 2008.

Government dictate or market dictate; that’s the question the dairy industry struggles with and the International Dairy Foods Association’s Bob Yonkers challenged DairyLine listeners in Tuesday’s broadcast to better prepare themselves for coming ups and downs in milk prices.

I suspect there are more than the two choices Bob Yonkers suggests.


  1. Who got the extra 10.4 billion? The processors? Aren't most processors cooperatives? Why was this money not shared with the farmers?

    Wouldn't this show up as massive profits on the books? Oh wait, we never see the books. Who on the "outside" does? But are we, the farmer, not the owner of the cooperative? Shouldn't the farmer be considered an "insider"?

    What did they do with the money? How was the extra money "hidden" in the financial statements, so as NOT to be distributed back to the farmer?

  2. The mainstream thinking in our dairy media drives me nuts. This thinking got us exactly what we asked for farmers and leaders too proud to admit this thing is really broken. We can't tinker with what we have and expect different results. We need to start from scatch with a new approach. We need smart out of the box thinkers like you John to really support and create some good solutions to get out of this market dictate mirage.

  3. The general public thinks that what they pay in the store for milk products all goes to the farmer. This is proven out by all blogs to the newspaper articles in the papers and on the news.Gives them the impression that the farmer is reaping huge benefit at their expense, and asking for a handout at the same time.WE know where the money went! Record processor profits.

  4. I aggree that there ought to be record profits on the books of the processors, but I think the reason it doesn't show up is because of their inefficiency and mismanagement. Also, deals with the world savvy Fontera, and some insider trading can sap profits in a hurry. They need to rip off their own farmers just to survive.