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Because the "food chain" from producer to retailer is mostly "value added" services of collection, processing, packaging, distribution, and retailing of the products.
At one point, the squeeze on the producer is tight enough that they go out of business.
The "game" that the buyers play is to allow just enough cash flow for a savvy producer to survive and justify their operation. As we have witnessed over the last few decades, many don't ... hence the loss of "family" farms and a lot of ground sold for development. We see many "farm auctions" in our region where folks with small operations that were profitable and livable since the 1940's-1960's are now being cashed out for the remaining value of the production equipment, the livestock sold off, and the old folks either heading to a assisted living facility or the proceeds going to their heirs who cannot justify the income for the work that it would take to carry on after the estate tax burden is addressed.
Some of these farms are lucky enough to be in locations where the land is valuable now for development, but a lot aren't. That land doesn't bring a lot per acre, but there's enough acres there that the total number can look very attractive for a cash out. With luck, there's another farming family in the area that can justify taking it over and keeping it productive.
Sunsprit--------I agree with your post, but will disagree (a little) with your first paragraph.
Cereal makers are quick to point out how small a percent the price of grain is in the cost of a box of cereal---------to explain why they don't drop it when grain prices take a huge drop.
They contradict themselves by raising the prices on cereal when grain goes up.
One would think if the the price of grain is such a ---small percent--of the cost of a box of cereal--------a rise in grain prices would have very little affect.
When grain prices go up, it gives the companies a reason to raise prices, so they do and they make more money
Quote:
Originally Posted by marmac
Sunsprit--------I agree with your post, but will disagree (a little) with your first paragraph.
Cereal makers are quick to point out how small a percent the price of grain is in the cost of a box of cereal---------to explain why they don't drop it when grain prices take a huge drop.
They contradict themselves by raising the prices on cereal when grain goes up.
One would think if the the price of grain is such a ---small percent--of the cost of a box of cereal--------a rise in grain prices would have very little affect.
Simply because there are always the 'middle men' who charge an exobitant amount to bring it to you, and display it on the market shelves. The truck drivers need money to move the item, the stock boys need money to stock the items, and the Grocer need money to be able to make a profit, plus, they probably have others who have thier hands in the till, before it even gets to the market...
Lets face it, if you dont go to the farms yourself and get it, your having something pass through a lot of hands before it gets to you.
May the LORD Bless each of you.
I wish you well...
Jesse
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