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Napanee, Ontario | Thanks Supercub, great discussion here.
Zagri,
"Do you feel that the market rewards profits for an industry in short time periods (i.e. to encourage new enterants, investment etc)?"
That's pretty much it. If you look at any commodity, this is generally the cycle. Some industries that are more mature like oil manage to sustain higher profits for longer, depending on barriers to entry, elasticity of demand at higher prices and how fast supply can come online. Ag production is so widely held (ie vs say the potash industry, or oil and gas) that oversupply is more of a problem..... supply is not easily reacted to and managed by a smaller number of key industry players that might provide for the more smooth returns that other industries are better at achieving. Look at how much the price of corn moves - It would be hard to find a more risky market where the price of the product you sell can change 50 - 100% regularily from year to year. Combined with having your production risk balancing on something as uncertain as the weather..... and well, it seems like there's no surprises why big money as left AG PRODUCTION (not processing) largely up for grabs for the little guys. | |
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Cow-Calf vs Row Crop Profit
