Saturday, October 2, 2010
Imbalance of Power
(click on images to enlarge)
Nearly everyone has become familiar with the concept of boom and bust. For dairy, there is no boom. The trend is not the result of some evil people plotting the destruction of dairy farmers. For the most part, most dairy farmers have supported the very politicians and policies which has brought dairy farming to near collapse.
Unquestioning belief in "supply and demand" determining price price through a "market" magical discovery prevails.
In fact, we have a price derived system - a top down system.
"Government is the problem" was bought hook, line and sinker in the early 80's. Antitrust resources were reduced on Ronald Reagan's first day in office to one eighth of what they had been the day before.
Supermarkets took off, as can be seen in the above graph. Supermarkets really wear the pants in dairy and dictate terms. Processors take those terms and through the CME give the dairy farmers the dregs.
Time is not really on anyone's side.