The word of the day is "monopsony."Icu4dzs said:As I said, my corn field cost me $2500 to grow and they offered me $900 for the entire 1025 bushel because it was high moisture and low weight.
A monopsony is basically the exact opposite of a monopoly; many producers, one consumer. In your case, the consumer was whoever operated that elevator.. They were buying from you, and the next guy, and the next guy, and pretty much could offer you whatever they wanted to offer and you could either haul it back to the house and dump it over the hill...or take what you could get.
In a monopsony, the buyer holds all the cards -- especially when there's too much of the product in the market anyway.
Unfortunately, the end product farmers are producing is almost always perishable in one way or another, and everybody's product comes in at more or less the same time.. Moreover, when it comes in, most everybody takes it to a central location that boasts FAR more producers than buyers, at which point they have to try to cut each others' throats..
It's just a TERRIBLE business model for the producer.
The ironic thing is that all the focus today is on MORE PRODUCTION! GMO corn is a great example, actually.. Use GMO corn and you can produce MORE CORN! Yay!...as though corn prices suck because there's not enough corn.
How could that make sense to anyone?!?
If farmers were smart, they'd skip spending tons and tons of money on fertilizer and pesticide and herbicide and let their fields grow up in weeds and bugs with maybe a stalk of alfalfa or an ear of corn here and there.. Instead of working like fighting fire and spending $2500 to harvest 1025 bushels...do as little as possible and harvest 100. If everyone did that, what little corn was brought to market would actually be WORTH something.
It'll never happen, though.. Market rules dictate that it will never happen because it would require collusion, and collusion almost NEVER happens "in the wild," so to speak.. Collusion requires business people NOT to cut one anothers' throats, and there's always a backstabber in every group.. You could get every farmer in your state together and decide -- as a group -- that you're not gonna try real hard that year....but ONE would, because he'd see an opportunity to cash in.
Such is life.
Eventually, independent farmers are going to go away in favor of vertical integration.. Companies that need corn will grow corn, and the guy in charge of doing it will get a weekly paycheck just like the rest of the world. And he'll do it their way, with their preferred seed, planting and cultivating and spraying and harvesting on their schedule, etc..
Already happened to chicken and hog farms.. Kentucky's tobacco growers are generally working under contracts now.. More and more beef producers are working under contracts, too..
Sad, but that's how I see it.