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| Not to white wash what amounts to basically cheating, the drive to do this and have the 'yellow sheet' is to provide some level of stability. Packers, grocers, etc all have huge investments that have trouble staying around if things change too fast or too much. Getting government involved tends to just add political types to the room at a desk with a phone and I don't think you'll find a more self interested group than politicians.
The problem is that we all want stability - I want my hog contract to not jump around because I have some huge monthly payments to make. Packers would rather absorb each other than compete because they run tight margins like everyone else. At any time anyone is free to enter the market and set up a packing plant or grocery store, but it's often a lot more work than folks these days are willing to do. When there is a lack of folks willing to jump into the market the whole 'self regulating' nature of a free market goes away.
Consider cash rents - it's a wide open market and it's clear that folks have been paying bankrupted levels of rent in order to reach a goal that has little to do with good business, yet it happens. It's a price discovery process and as long as there is competition we all get to find out what we can pay and stay in business. There will be those times when the guys pushing the limits all get flushed out and some resetting occurs and we might have the upper hand in rent arrangements for a short time, but eventually the guy that doesn't want to farm all the ground, just the ground next to his is back bidding again. There doesn't need to be a law and in fact programs tend to support the guys pushing rents too much - a quicker exit probably prevents the $30M debts that can never be paid back and 'unnatural' influence on rents.
Maybe it's just culture that keeps competition lower than it should and eventually allows those still playing to shut as many doors to competition as they can get away with. | |
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The man who sets meat prices
