Letters to the Editor: Farmers are price takers

Published 5:17 pm Tuesday, May 14, 2024

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A price taker is a market participant who individually, including farmers and other consumers, are too small to influence market price on their own. Farmers have the added disadvantage of being price takers for both the products they sell and the products they need to purchase to produce their crop or livestock. The numbers of competitors for the products farmers sell or the supplies they buy are being reduced because of lax anti-trust laws and enforcement at the federal level.   

The USDA Economic Research Service is projecting a $44 Billion reduction in farm income in 2024. Prices for our major crops, corn and soybeans, are down significantly. Costs for inputs farmers purchase are expected to continue rising with only fuel and fertilizer slightly declining. We need robust competition to provide fair prices for both sales and purchases.

There are some industries where monopolies are allowed, for example utilities. These are instances that it is not in the public interest to have multiple sets of wires or pipes delivering electricity or natural gas running along roads or streets. Monopolies like utilities are regulated to limit their rates or profits, their construction investments and operating standards.

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Another basic service that is being reviewed is healthcare. Typically, there is only one provider of medical and emergency services (increasingly there is no service available). This is especially the case in rural areas away from metro centers.       

Mergers have left us with only two major suppliers of corn and soybean seed. They also own the patents for major seed traits and control the fees small seed companies must pay to use those traits. In the case of soybean seed farmers generally contractually cannot use their crop for seed and are forced to buy new seed for every planting season.

There are only two major manufacturers of farm machinery (if you are die-hard red or green there is only one). When farmers and other consumers purchase equipment the manufacturers should be required to provide repair information (or right-to-repair) so the buyer is not forced to use expensive company repair services.

Capitalism is the goose that laid the golden egg and is the foundation for the miracle of the US economy. Unfortunately, the natural tendency is that competitors merge and consolidate until monopolies form. The result is market power in too few competitors allowing them to control prices.

Sen. Klobuchar has been campaigning for a tightening of anti-trust laws to reduce the number of mergers that are reducing competition. Tougher merger regulation is required for there to be a fair economy.

Joe Pacovsky

Hayward, MN