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n. Illinois | The big boys stay out of grain production until they can develop a seed that has characteristics that they want to own and control forever. They will pay you a fee to custom raise it for them. It will reduce the volatility in earnings so instead of making a fortune for a couple years followed by losing your ass for several years, operators will opt for the guaranteed small profit. There is a limit to the logistics in running a farming operation over hundred of thousands acres. The economies of scale disappear too, Those big time operators all have higher actual operating cash expenses than your average family sized farming operation IE those girls in the office keeping track of everything do not work for free.
The consolidation of the Chicken and Hog industries were driven by the desire of some feed guy to grow his feed business, Found that by applying modern management controls that they could improve performance allowing them to expand geometrically in parts of the country that had #1 no environmental controls in place and #2 a culture of more cooperation among farmers vs the strong independent streak found among the farmers in the upper Midwest (those Germans and Nordic people are very independent minded) | |
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more farm consolidation cure low prices?