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SW “Ohia” | Ethanol insider,
Ask a tobacco farmer about direct contracting.
Ask him what he would do if he could go back to 2002, knowing how things are today. Would he take that extra $0.05 per pound bump by bypassing the warehouse auctions?
Ask him how his friends, neighbors, fellow growers, and local suppliers feel when that contract disappears before their eyes, leaving a gaping hole in their wallet and bringing an end to seven generations of tending the crop.
Most importantly, ask him why farmers are willing to take break-even (or below) prices for years on end? Why don't they do something? Because if you ever give up your contract, or say the wrong thing to the wrong person, or don't make a change the end user wants, you won't be growing the crop anymore. There's no other way to sell it!
Farmers will certainly "take all they can," right until they can't take anything else. Commercial produce growers lost this fight years ago. Poultry did too. Hogs are pretty much there. Cattle feeders are starting that direction too. Once the "grower pool" shrinks to an adequate size, the market closes up. That might be fine if you are one of the lucky few that slips through, but if you aren't, you are out of the business. No open market, no opportunity for a young farmer to get started at all.
Some folks might be content as an employee for the buyer corporations, but many are not.
Edited by Red Paint 12/30/2016 21:06
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Smithfield cuts out the "middleman"
