I had an interesting conversation with our hay supplier today.
We were discussing the weather (as all farmers do.) The cold wet weather has made it difficult for some hay producers to finish their first cut. That hay is now virtually worthless.
I was fortunate. My hay supplier cut their first crop early, and I ordered early. The result is that my barn is full of some of the highest quality hay I have ever purchased.
My own pasture is suffering the effects of the weather though, so I many need some additional hay to make it through the winter this year. I was asking my supplier about their second cut.
My supplier assured me that, because they took the first cut early, their second cut was going to be very good also. However, the price could be approaching $6.00/bale by the end of the season. Because I only need a relatively small amount to “top off” my barn, I am not overly concerned about this.
Others, however, will not be so fortunate. Many other customers did not order early. They were hoping that the price would be lower later in the season. They gambled, and they lost. They may now end up paying premium prices for hay – if they can get it.
My daughter in Illinois observed the same thing last year. The weather there also affected the hay crop, and prices for hay (and for feed in general) were very high. My daughter is a professor at a major university and a research scientist; her institution paid the market price and she did not have to worry about “running short.” Many farmers who actually make their living from the farm, on the other hand, saw their profit margins shrink as the cost of feed and diesel fuel rose.
We had a similar situation recently here on the Ridge. We have joined the Northwest PA Growers Co-op, and we hope to become producers for the cooperative. In order to meet the co-op standards, we have to convert all of our livestock to GMO free, antibiotic free, chemical free food – something we’ve been wanting to do anyway. Of course, the naturally grown and produced food is slightly more expensive than the commercially available feeds. In order to compensate, the price of our eggs, chickens, and goats has to be adjusted accordingly. Some folks were OK with that, but we did lose a couple of customers. The small price adjustment was more than they were willing to pay for a product that already had a “premium” price tag.
In another scenario, my wife had lunch at a local restaurant, and struck up a conversation with the restaurant owner who is also an acquaintance of ours. When she found out we produced eggs, she said “Oh, I’ll buy your eggs! I’m always looking for local sources for my produce!” When she found out our eggs were $3.00 per dozen, however, she backed down. “Oh – I never pay more than $1.50 per dozen for eggs.”
My conversation with my hay supplier waxed a bit philosophical as we discussed the impact of farm subsidies on public perception. We have so heavily subsidized agriculture for so long in this country that consumers no longer have a sense of the real cost of food production – what Paula and I refer to as “the preciousness of food”.
When we work hard to produce our own food, we [correctly] value the work of our hands. We don’t waste a quart of beans because that quart of beans represents an hour of our lives, spent in picking, washing, snapping, and preserving the end product.
Most consumers, however, do not have this sense of “the preciousness of food”. We spend millions on food, but discard 25% of what we purchase. Consumers expect, and even demand, that food be available in vast quantities, in any season, in great variety, at absurdly, unrealistically low prices.
The example of the restaurant owner previously mentioned is a case in point. Now, the restaurateur has to be able to make a profit, too, obviously. And we are not a large producer, so we cannot afford to offer volume discounts; nevertheless, this spoke to me once again about how we value agricultural products. The restaurant owner would be willing to buy our eggs – as long as we were able to match the price of the eggs she was getting from the industrial agricultural producers, who receive government subsidies and thus have an unfair competitive advantage. It’s not that the industrial producer’s costs are lower than ours – on the contrary, due to the high rates of disease, contamination, and the vast quantities of petroleum and chemicals used in their production and distribution methods, their costs are often HIGHER than ours – it’s the fact that they are subsidized by the government, and so they can sell their product “cheaper” and still make a “profit”. The government may just as well take my money and give it directly to Tyson, or Jimmy Dean, or Con-Agra – that is, in effect, what they are doing anyway via the farm subsidy system. In addition, when you are producing thousands of eggs per day, one egg does not seem particularly “precious.” (Paula and I are concerned if our production drops by a couple of eggs a day.)
The result is that most consumers have no idea what it really costs to produce an egg, or a broiler chicken, or a head of lettuce. Their sense of value is skewed, and competition in the marketplace – the physical/economical, but also the marketplace of ideas – is suppressed. That’s the “real cost” of the farm subsidy system.