Economists to Cattle Ranchers: Stop Being So Emotional About the Monopolies Devouring Your Family Businesses (1 Viewer)

Users who are viewing this thread

    SaintForLife

    Well-known member
    Joined
    Oct 5, 2019
    Messages
    7,313
    Reaction score
    3,404
    Location
    Madisonville
    Offline

    Agricultural economists manipulated data to block Congress from acting on high beef prices and the destruction of independent cattle ranching. Why? Because they think monopolies are good.​


    Last week, there was what should have been a historic hearing in the House Agriculture Committee, with the goal of reforming America’s cattle ranching system. The first witness was a Republican Senator trying to persuade the House members to adopt his legislative initiative. “My name is Chuck Grassley,” he said, “And I’m a farmer from Butler County, Iowa.” Grassley’s homespun rhetoric disguised a sophisticated and longstanding campaign to address a crisis in the beef industry, and more broadly, our food system at large.

    To consumers, this crisis appears as high meat prices, with costs for beef up 12% this year alone. “I've never seen it like this in all the years I've been doing this," said Bob Strupeni, a butcher in San Francisco who has been working in the industry for 44 years. Higher meat prices are responsible for roughly half the annual increase in food prices, and food inflation is not only stretching household budgets, but has created a serious political problem for the White House. In September, the Biden administration attacked the industry over high prices, calling for an end to “pandemic profiteering.”

    To cattle ranchers, who actually sell the cows to packers that are turned into beef, the crisis is not high prices, but low prices. They aren’t getting very much for their cattle. This is weird, because, normally, beef and cattle prices move in tandem - the current high beef prices should result in high cattle prices. But since 2015, the ‘meat margin’, or the spread between the prices ranchers get for their cows and the prices consumers pay at the supermarket, has widened dramatically. Despite high consumer prices, independent ranchers are losing money, and going out of business. “If we don’t get some of these problems fixed quickly, we won’t have any independent ranchers in this country,” explained Oklahoma Farmers Union president Scott Blubaugh.

    Why are there high prices to consumers and low prices to cattle ranchers? Grassley had an answer. “The four major beef packing companies control 80% of the cattle industry,” he told the House members. And they are what he called “a chokepoint” for the entire sector. In other words, follow the money. In the beef industry, it’s not Amazon, Apple, Google, and Facebook suppressing business, but “the Big Four” - Tyson’s, JBS, Cargill and National Beef, who control 85% of the market (and more in some regions).

    Grassley’s chokepoint comment is right; for every dollar Americans spend on food, only 14.3 cents goes to the farmer. And much of the rest of it goes to the middlemen. JBS, for instance, paid out a record $2.3 billion in dividends in 2020, and plans to increase that by 75% this year, even as cattle producers leave the industry
    .




    Very informative and interesting article which is an important discussion to have with how monopolies have so much control while Congress looks the other way.
     
    I didn’t read that in any media, we were talking about it at the hospital the other day. They’ve made us pare down our inventory so much that it’s been touch and go sometimes during the pandemic.

    But you just continue along with your little insults. They don’t affect me at all, but they do leave an impression of you.
     
    The other thing that is coming back to bite us right now is all the “just in time” inventory models. We’ve all heard ad nauseum about their efficiency and so on. But when your supply chain has hiccups, you catch pneumonia. So where’s the efficiency now?
    Yep it has been huge. Back in the day companies had inventory we don't any longer no matter the industry. Inventory makes them not look so good the shareholders. Cut it razor thin with stock it makes it look like spending has been cut when it has not.

    I can't tell you how annoying it is trying to track down parts to repair things. Ten years ago parts were stocked now they have to be ordered. When you purchase a machine that costs 10k from someone you would expect to have wear parts stocked but they are not. Then we strain the shipping companies.

    This is from a guy that spent well over an hour on the phone with FedEx today. I spent 90 bucks more to get it shipped to me by the 20th 164 in shipping total. Don't have it today landed in town yesterday with the excuse on the tracking Delay beyond our control and is now unscheduled. So no date for delivery.

    Ten years ago I could have stumbled in a dozen places and picked it up now. So the answer to my problem is now I have to drive 30 miles before I start my day to pick up something I paid 164 extra bucks for to get shipped. So 60 mile round trip hours on phone and driving lack of inventory is gonna cost me and that is not counting the cash.

    This has to change.
     
    Ok.

    So JIT inventory levels has nothing to do with the shortages. It’s actually the thing that kept the market from completely collapsing. That is a whole different and long topic on material hoarding and metal speculation that I won’t bore you with

    I love you @MT15 but you are missing the mark here.

    You can’t out stock a supply shortage. It doesn’t work that way. You would have to stock EVERYTHING. Not just some parts…..everything in large quantities to be able to have enough to work in a shortage.

    But that isn’t the one really big problem. Warehousing. No JIT isn’t just good for the stockholders. You can’t warehouse parts to make more of something hoping someone will buy it. Rents are ridiculous. Most states have inventory taxes. You forecast years in advance. And purchase bulk raw material.

    Someone mentioned they were unhappy they can’t get a part. Again, nothing to do with JIT. Your part wouldn’t come from an OEM. It would come from a licensed parts manufacturer. shirt even 30 years ago in GM used AC Delco parts instead of making their own.

    The fact is, there is no way to get around supply shortages during a pandemic until humans are out of the equation.
     
    Ok.

    So JIT inventory levels has nothing to do with the shortages. It’s actually the thing that kept the market from completely collapsing. That is a whole different and long topic on material hoarding and metal speculation that I won’t bore you with

    I love you @MT15 but you are missing the mark here.

    You can’t out stock a supply shortage. It doesn’t work that way. You would have to stock EVERYTHING. Not just some parts…..everything in large quantities to be able to have enough to work in a shortage.

    But that isn’t the one really big problem. Warehousing. No JIT isn’t just good for the stockholders. You can’t warehouse parts to make more of something hoping someone will buy it. Rents are ridiculous. Most states have inventory taxes. You forecast years in advance. And purchase bulk raw material.

    Someone mentioned they were unhappy they can’t get a part. Again, nothing to do with JIT. Your part wouldn’t come from an OEM. It would come from a licensed parts manufacturer. shirt even 30 years ago in GM used AC Delco parts instead of making their own.

    The fact is, there is no way to get around supply shortages during a pandemic until humans are out of the equation.
    AC Delco is a GM division not an outside oem. I get what you are saying just a bad example.

    To take it to a bulk raw materials level we would have to get back to the point of manufacturing opposed to assembly what we tend to do now.

    My point is lack of inventory used by all now is taxing the crap out of shipping companies.
     
    So, I’m just looking at it from my own narrow perspective, and I’m sure you know more about it than I do. I just know that we used to stock a lot more reagents than we do now. So if something went on back order we didn’t worry because we had a built in cushion. I realize that was inefficient, but now when there’s a back order we might run out and in health care that isn’t good. It has lead to some anxiety, lol. Doctors don’t want to hear excuses about why you can’t run their tests.

    There was one test recently where we had to purchase and validate a different kit, which is a royal pain in the rear, just for a month until we could go back to our original supplier. In the week or so it took to validate, we had to send samples out. Sometimes the reference lab requires a different type of sample, so patients have to be redrawn. Ugh.

    But the main thing I have noticed in the last few years is that when an analyzer needs a part, we have to wait on it. Used to be they had it in their local warehouse or the guy even had one in his vehicle if it was a common part, but now it’s almost always a wait to get it shipped. So the upshot is that we are “down” for that analyzer for 1-2 days instead of part of a day. This involves either shipping samples out to another lab, or for most of the more important analyzers we just have two of them.

    I know most of this doesn’t have anything to do with the pandemic BTW. 🙂 Just observations.
     
    It is not simply middlemen. It is financialization. It is massive concentrations of economic power. And it appears in virtually all market segments. No, concentrations of market power do not arbitrarily produce low prices. They produce the ability to heavily impact prices to maximize profit and shareholder price.

    Another important thing to remember is that there is no such thing as an externality.

    May I suggest “The Finance Curse” by Nicholas Shaxson?
     
    @The moose - First glad to see you posting again. Second, I used AC Delco specifically because they were a subsidiary- they made parts for GM exclusively. However, They had their own executive structure and each factory was operated independently and regionally. They were closer to a franchise than an OEM.

    However you are exactly correct about assembly vs manufacturing. But when all of you raw material comes from overseas, shipping them here and then working them into commodities is a losing formula. So you mine them in China where you have no environmental regs and cheap labor to make all the base building materials (steel beams, sheet metal coils, etc) and then ship here for assembly to avoid tarrifs.

    When Demings first defined Lean, he was laughed out of GMs Board Room. Ford too. Every American manufacturer did. So he went to Japan to develop their census (he developed ours) while they were rebuilding after WW2, and met with Ohno and Toyota. It was the beginning of the end for the United States Manufacturing Industry.
     

    Create an account or login to comment

    You must be a member in order to leave a comment

    Create account

    Create an account on our community. It's easy!

    Log in

    Already have an account? Log in here.

    General News Feed

    Fact Checkers News Feed

    Back
    Top Bottom