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Farm Business
Agricultural Matters
The on-going up hill battle that is agriculture.....
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<blockquote data-quote="Cowabunga" data-source="post: 7548798" data-attributes="member: 718"><p>That’s been mentioned ever since I can remember. There is no traction in it because all the businesses are forever creating more output and many single units are now bigger than four from the 1970’s. Many much bigger than that and with no more labour than in the 1970’s either. So rather than pool resources they decided to get the same economy of scale individually. They are no better off though. The reason is simple economics. The economics of micro-businesses in commodity production, which is that however low the average cost of production gets, the selling price of that commodity will drop to or below that average, just about keeping businesses producing the required quantity and no more. As businesses expand production to lower unit cost, then as sure as eggs is eggs the selling price will eventually fall and margins revert to marginal. Hence the need to continually expand to stay ahead of the game. Except that large capital expenditure is a gamble and seldom leaves a farm business more cash rich for possibly decades. Paper wealth yes. But the ability to pay bills is another matter in many cases.</p><p></p><p>Every business is different with people who have different aims, ambitions, ability, labour availability [family perhaps?], ways of raising capital and, significantly for the gamblers, luck.</p></blockquote><p></p>
[QUOTE="Cowabunga, post: 7548798, member: 718"] That’s been mentioned ever since I can remember. There is no traction in it because all the businesses are forever creating more output and many single units are now bigger than four from the 1970’s. Many much bigger than that and with no more labour than in the 1970’s either. So rather than pool resources they decided to get the same economy of scale individually. They are no better off though. The reason is simple economics. The economics of micro-businesses in commodity production, which is that however low the average cost of production gets, the selling price of that commodity will drop to or below that average, just about keeping businesses producing the required quantity and no more. As businesses expand production to lower unit cost, then as sure as eggs is eggs the selling price will eventually fall and margins revert to marginal. Hence the need to continually expand to stay ahead of the game. Except that large capital expenditure is a gamble and seldom leaves a farm business more cash rich for possibly decades. Paper wealth yes. But the ability to pay bills is another matter in many cases. Every business is different with people who have different aims, ambitions, ability, labour availability [family perhaps?], ways of raising capital and, significantly for the gamblers, luck. [/QUOTE]
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Farm Business
Agricultural Matters
The on-going up hill battle that is agriculture.....
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