The article illustrates the crisis, producing an example of how farmers fail to make ends meet:
>A gallon of milk costs a farmer approximately $1.90 to produce, but in the last year, farmers have been receiving as little as $1.35 per gallon.
But they don't explain the underlying economic forces. The only possible reason (I think) that a farmer can't charge more than $1.35 for a gallon of milk is that some other farmer is able to produce a gallon of milk for less than $1.35.
So, clearly, some farmers are quite successful, and their success (or maybe just their efficiency) is part of the reason that other farmers are having a hard time? But the article doesn't talk about that much.
Slightly off topic: I pay my local supermarket $3 for a gallon of milk and now I'm curious about the breakdown of what that markup is spent on.
> the only possible reason that a farmer can't charge more than $1.35 for a gallon of milk is that some other farmer is able to produce a gallon of milk for less than $1.35
Not necessarily - if you have demand for 300 units of milk and there are enough producers to match, then when demand halves, the producers are still producing 300 units of milk and paying for the costs to produce that amount of milk. To offset those costs as much as possible, they'll willingly momentarily sell under marginal cost - the production costs have already been spent anyways
Oh boy. If you and GP think there's a purely unregulated Laissez-faire market for dairy products in the U.S., you've got some fun reading to catchup on.
What can change things dramatically at least in the upper Midwest is if the US is able to convince Canada to eliminate or greatly lower the tariff on milk and cheese.
In our area of Michigan a huge new cheese plant is going in and the only justification I can see for that large an investment is they already know the dairy tariff is ending.
>A gallon of milk costs a farmer approximately $1.90 to produce, but in the last year, farmers have been receiving as little as $1.35 per gallon.
But they don't explain the underlying economic forces. The only possible reason (I think) that a farmer can't charge more than $1.35 for a gallon of milk is that some other farmer is able to produce a gallon of milk for less than $1.35.
So, clearly, some farmers are quite successful, and their success (or maybe just their efficiency) is part of the reason that other farmers are having a hard time? But the article doesn't talk about that much.
Slightly off topic: I pay my local supermarket $3 for a gallon of milk and now I'm curious about the breakdown of what that markup is spent on.