John D. Giorgis wrote:
>At 10:52 AM 2/2/01 -0500, K Feete wrote:
>>Most farmland now is being bought by developers, not farmers, so any real
>>estate statistics are suspicous.
>
>Why does the person buying the land make the price suspicious?
The context was in terms of land depreciation, or more accurately the
degradation of land for farming purposes. Since developers don't care how
good the farmland is, quoting real estate prices for farmland as a proof
that the land isn't being raped can be deceptive.
>>and most of the farmers around here are
>>going out of business because their land is no longer productive.
>
>Is the land no longer productive because yields have gone down? Or is it
>because the price of commodity foodstuffs has gone down?
Both.
I note it hasn't gone down in the grocery store, either, but up... <sigh>
>> The yield has gone up, but the
>>profit margin remains the same... if not smaller. I'm not an expert on
>>crop farming, but I'm betting it's the same deal there.
>
>Wasn't somebody just arguing to me (Jeroen? you?) that when costs go down,
>the only thing that increases is profits? i.e. prices never go down with
>costs?
Probably Jeroen, I don't remember that. Anyway, I don't understand the
relevance to my remark. See below.
>What you write above, however, is exactly what *I* would predict. As
>yield goes up, the cost per unit has gone down . As more of the food is
>produced, the increased supply causes price to go down, and profits thus
>remain at the equilibrium level.
No, that's not it at all. The yield goes up because more money is being
invested (in fertilizers and other expenses), but that means that the
cost also goes up, so nothing changes at all. In other words, someone who
was producing, say, 40,000 pounds of milk a year before, but then started
investing in various yield enhancers (TMR feed, BGH shots, et cetera, et
cetera) and was able to produce 80,000 pounds of milk a year hasn't
gained anything. The gross profit is doubled, but the expenses are also
doubled, making the extra profit marginal if not nonexistant. Only very
large farms can benifit from marginal profit increases. Does that make
more sense?
In other words I wasn't even considering the commodity price drop caused
by the larger supply, although that also exists. It's the other half of
the pliers squeezing farmers to death.
Kat Feete
"It is absolutely certain that if a Christ should reappear
in the world he would be interviewed and photographed
by the press and would not live longer than one month.
He would die being fed up with himself, as he would
see himself banalized beyond all endurance. He would be
killed by his own success, morally and spiritually."
-Carl Jung
