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Farm Business
Agricultural Matters
Is The Whole Job Just Completely Buggered?
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<blockquote data-quote="Goweresque" data-source="post: 6118928" data-attributes="member: 818"><p>There's a fundamental flaw in the 'add value to your produce' business proposition, which is this - if you start adding value by processing your output, and its successful, then you could be as successful by just being a processor and forgetting producing the raw materials yourself, and just buying them in. Why do you think that Tesco don't own farms? Because there's no business synergy between retailing and food production. Ditto all the big food processing companies, they just buy in their raw material, they don't own farms.</p><p></p><p>Farming is a commodity business, the lowest cost producer will make money, everyone else will struggle. Owning the processing plant and shop that sells your produce won't make the actual raw material production any more profitable.</p></blockquote><p></p>
[QUOTE="Goweresque, post: 6118928, member: 818"] There's a fundamental flaw in the 'add value to your produce' business proposition, which is this - if you start adding value by processing your output, and its successful, then you could be as successful by just being a processor and forgetting producing the raw materials yourself, and just buying them in. Why do you think that Tesco don't own farms? Because there's no business synergy between retailing and food production. Ditto all the big food processing companies, they just buy in their raw material, they don't own farms. Farming is a commodity business, the lowest cost producer will make money, everyone else will struggle. Owning the processing plant and shop that sells your produce won't make the actual raw material production any more profitable. [/QUOTE]
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Is The Whole Job Just Completely Buggered?
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