The response to the pandemic destroyed countless small businesses – one wonders why so much attention is being selectively paid to the plight of the small rancher.
Didn't Hillary's thing work like this? The brokerage would make, say, 10 trades. Say 5 were gains and 5 were losses. The gaining trades were assigned after the fact to Hillary's account. The brokerage absorbed the losses in the other 5. And presto! The brokerage has sent some $$ to the governor's wife, in a cleverly roundabout way.
(BTW this post-trade assignment of trades was legal then, but later banned.)
Great article. Need to pair with a review of Thiel's "Zero to One" about how "nice" monopolies are the optimal solution. Raw capitalism and messy markets are old school
Will you look into big dairy please? We have a couple of small dairies we can purchase raw milk. I asked them why the do not have butter and sour cream. They said that big dairy lobbied for regulations that do not allow small dairies to produce butter and sour cream. The small dairies have spent large amounts of money to get the regulations changed but to no avail.
This won't end well if something disrupts the commercial dairy chain. Humans can survive famine for a long time eating butter and a potatoes.
Sounds like the UK milk businesses. In the 80's all milk was delivered to your door and controlled by a number of companies. These paid the farmer's a fair price.
In 87, one of the dairies sound there milk to the supermarket ASDA ( later taken over by Walmart, who sold it last year). The diary (intermediary) got a great deal. Shortly after all the other main dairies did the same. The price of milk came tumbling down, severely affecting the farmers as the supermarkets squeezed out the profit. All the intermediaries have left the market or gone bankrupt as the supermarkets were significantly larger and stronger. Many farmers were in trouble and milk has had to be imported as a consequence.
So many people lost their jobs. The UK milk floats were electric, well ahead of there time.
Political hit piece. Did nothing to substantially illuminate the consolidation in the meat packing industry and it's effects on the rancher or consumer.
"I don't care who does the electing, as long as I get to do the nominating." Boss Tweed was an early practitioner of owning the politician well before they reached office.
I'm enjoying how the comments all go on about how to buy beef (not even the more general meat, but beef) while not realizing the article is using a specific case to point out a general problem. It's like taking a coof vac instead of realizing the problem in public health.
I will ask my regional health food chain about the source of their grass fed $13 lb. beef stew meat. It's perfectly trimmed and reminds me of the good old days.
Stoller's argument that 80% of the cattle are now sold under long-term contracts with reference to a "spot" price of cattle which has become thin and easily manipulated, makes absolutely no sense unless you assume that the sellers of the 80% are idiots. (Typical for the quality of his arguments, IMHO.)
Pointing to the expanded margins of Tyson Food during an enormously disrupted period also makes no sense. If this continued significantly past the current period, then it would be meaningful, but drawing meaningful conclusions from one quarter's data during a pandemic is impossible.
Spot and long term contract serve two very different purposes. See Natural Gas Market in EU for a classic case of trying to get a bargain / edge by attempting to move to spot vs. long term.
That's not my point - nor Stoller's. These are long-term contracts where the periodica price is determined by reference to a spot market. This is not unusual at all. For example, there are literally trillions of dollars (notional) of interest rate swaps where one end of the swap - the floating rate - is repriced by reference to spot rates of interest.
Interest rates is a physical commodity??? The Master said, "I do not open up the truth to one who is not eager to get knowledge, nor help out any one who is not anxious to explain himself. When I have presented one corner of a subject to any one, and he cannot from it learn the other three, I do not repeat my lesson."
Well, Master, you never said physical commodity. You said spot versus long-term markets. And not just physical commodities trade in markets. But I agree with your general sentiment: there is no point to further exchange. Bye now.
Not idiots. The 80% have no other options to sell their cattle within a reasonable freight cost range. In the beginning the concept sounded pretty good, but the geographical location of the processing plants and the placement of feed lots overtime has led to the sellers having no other real competitive option. Basically the sellers walked into a trap.
"Basically the sellers walked into a trap." Isn't this just another way of saying the same thing?
You seem to have a lot more industry expertise than I do, which isn't a high hurdle. So, you may very well be right, but I am always dubious of explanations which require consistently sub-optimal behavior on the part of market actors. However, this is also a heavily regulated field and this kind of behavior can arise, and persist, when there are regulatory barriers to change.
I hope you're in contact with Joel Salatin a.k.a. The Lunatic Farmer. HE definitely is on record regarding the distorted meat production 'system' in America.
My family bought from him for years. I Just assumed that his quality meat was “standard” until I left for college and realized it was some of the highest quality I’d ever had.
Back in the day, communities would get together and spend a week processing beef, pork, whatever. There is nothing to prevent that from happening again.
I haven’t figured out why farmer owned cooperatives are not players in the meat processing market. That could help level the playing field. They play a huge role in dairy processing and grain processing/export.
Upon Sinclair set it out, and the only change might be the near lock of Chicago in financing of beef ranching. In any case the real extraction in grain by NY/Chicago is done by control of rail transport and export terminals, so they don't need to lock down the individual plants and farmers, where as dairy for market and product reasons has remain a local oligarchy dominate.
Biggest NY/Chicago extraction on dollars on grain farmers are publicly traded companies maximizing profits. Seed, equipment, and fert every up tick in the corn price.
80+% of #2 yellow corn in most years is used locally to feed animals or used in ethanol. Farms either move corn to the ethanol plant themselves, or they are member owners of the cooperative that will take care of marketing the grain. The cooperative can transport to an ethanol plant or mill the corn and it is sent back out for animal feed. Not sure where your export terminal argument is based out of.
If farms would work together to process the meat and get it to the marketplace at scale as the do in other agriculture industries, the outcomes would be share in the wealth with the farmers, keep a check on prices, or cause some real shady behavior by the big four at the retail level.
The response locally here in the Midwest when many slaughter and butcher shops got booked for a year to two years out during the highest points of panic last year was that a bunch of new shops opened. It's great. Now there's quality shops all over to take cattle to, and a thriving brisk local business in meat. More ranchers are selling directly to consumers and setting up all kinds of different vehicles for doing so, shares, quarters, etc
The response locally here in the Midwest when many slaughter and butcher shops got booked for a year to two years out during the highest points of panic last year was that a bunch of new shops opened. It's great. Now there's quality shops all over to take cattle to, and a thriving brisk local business in meat. More ranchers are selling directly to consumers and setting up all kinds of different vehicles for doing so, shares, quarters, etc
Didn't Hillary's thing work like this? The brokerage would make, say, 10 trades. Say 5 were gains and 5 were losses. The gaining trades were assigned after the fact to Hillary's account. The brokerage absorbed the losses in the other 5. And presto! The brokerage has sent some $$ to the governor's wife, in a cleverly roundabout way.
(BTW this post-trade assignment of trades was legal then, but later banned.)
Great article. Need to pair with a review of Thiel's "Zero to One" about how "nice" monopolies are the optimal solution. Raw capitalism and messy markets are old school
Great article!
Will you look into big dairy please? We have a couple of small dairies we can purchase raw milk. I asked them why the do not have butter and sour cream. They said that big dairy lobbied for regulations that do not allow small dairies to produce butter and sour cream. The small dairies have spent large amounts of money to get the regulations changed but to no avail.
This won't end well if something disrupts the commercial dairy chain. Humans can survive famine for a long time eating butter and a potatoes.
That opening sentence is brilliant. And hysterical. 😂
Sounds like the UK milk businesses. In the 80's all milk was delivered to your door and controlled by a number of companies. These paid the farmer's a fair price.
In 87, one of the dairies sound there milk to the supermarket ASDA ( later taken over by Walmart, who sold it last year). The diary (intermediary) got a great deal. Shortly after all the other main dairies did the same. The price of milk came tumbling down, severely affecting the farmers as the supermarkets squeezed out the profit. All the intermediaries have left the market or gone bankrupt as the supermarkets were significantly larger and stronger. Many farmers were in trouble and milk has had to be imported as a consequence.
So many people lost their jobs. The UK milk floats were electric, well ahead of there time.
Political hit piece. Did nothing to substantially illuminate the consolidation in the meat packing industry and it's effects on the rancher or consumer.
Do you believe this consolidation went ahead without political cover policy purchased?
"I don't care who does the electing, as long as I get to do the nominating." Boss Tweed was an early practitioner of owning the politician well before they reached office.
I'm enjoying how the comments all go on about how to buy beef (not even the more general meat, but beef) while not realizing the article is using a specific case to point out a general problem. It's like taking a coof vac instead of realizing the problem in public health.
I will ask my regional health food chain about the source of their grass fed $13 lb. beef stew meat. It's perfectly trimmed and reminds me of the good old days.
Stoller's argument that 80% of the cattle are now sold under long-term contracts with reference to a "spot" price of cattle which has become thin and easily manipulated, makes absolutely no sense unless you assume that the sellers of the 80% are idiots. (Typical for the quality of his arguments, IMHO.)
Pointing to the expanded margins of Tyson Food during an enormously disrupted period also makes no sense. If this continued significantly past the current period, then it would be meaningful, but drawing meaningful conclusions from one quarter's data during a pandemic is impossible.
Spot and long term contract serve two very different purposes. See Natural Gas Market in EU for a classic case of trying to get a bargain / edge by attempting to move to spot vs. long term.
That's not my point - nor Stoller's. These are long-term contracts where the periodica price is determined by reference to a spot market. This is not unusual at all. For example, there are literally trillions of dollars (notional) of interest rate swaps where one end of the swap - the floating rate - is repriced by reference to spot rates of interest.
Interest rates is a physical commodity??? The Master said, "I do not open up the truth to one who is not eager to get knowledge, nor help out any one who is not anxious to explain himself. When I have presented one corner of a subject to any one, and he cannot from it learn the other three, I do not repeat my lesson."
Well, Master, you never said physical commodity. You said spot versus long-term markets. And not just physical commodities trade in markets. But I agree with your general sentiment: there is no point to further exchange. Bye now.
Not idiots. The 80% have no other options to sell their cattle within a reasonable freight cost range. In the beginning the concept sounded pretty good, but the geographical location of the processing plants and the placement of feed lots overtime has led to the sellers having no other real competitive option. Basically the sellers walked into a trap.
"Basically the sellers walked into a trap." Isn't this just another way of saying the same thing?
You seem to have a lot more industry expertise than I do, which isn't a high hurdle. So, you may very well be right, but I am always dubious of explanations which require consistently sub-optimal behavior on the part of market actors. However, this is also a heavily regulated field and this kind of behavior can arise, and persist, when there are regulatory barriers to change.
I hope you're in contact with Joel Salatin a.k.a. The Lunatic Farmer. HE definitely is on record regarding the distorted meat production 'system' in America.
My family bought from him for years. I Just assumed that his quality meat was “standard” until I left for college and realized it was some of the highest quality I’d ever had.
Back in the day, communities would get together and spend a week processing beef, pork, whatever. There is nothing to prevent that from happening again.
Fedgov be damned.
Robert Caro (with a C not a K)
communism coming in from the top???
I haven’t figured out why farmer owned cooperatives are not players in the meat processing market. That could help level the playing field. They play a huge role in dairy processing and grain processing/export.
The big four apparently retaliate against supermarkets that buy from independent packers.
Upon Sinclair set it out, and the only change might be the near lock of Chicago in financing of beef ranching. In any case the real extraction in grain by NY/Chicago is done by control of rail transport and export terminals, so they don't need to lock down the individual plants and farmers, where as dairy for market and product reasons has remain a local oligarchy dominate.
Huh? Source on any of that..
Biggest NY/Chicago extraction on dollars on grain farmers are publicly traded companies maximizing profits. Seed, equipment, and fert every up tick in the corn price.
80+% of #2 yellow corn in most years is used locally to feed animals or used in ethanol. Farms either move corn to the ethanol plant themselves, or they are member owners of the cooperative that will take care of marketing the grain. The cooperative can transport to an ethanol plant or mill the corn and it is sent back out for animal feed. Not sure where your export terminal argument is based out of.
If farms would work together to process the meat and get it to the marketplace at scale as the do in other agriculture industries, the outcomes would be share in the wealth with the farmers, keep a check on prices, or cause some real shady behavior by the big four at the retail level.
Great article.
The response locally here in the Midwest when many slaughter and butcher shops got booked for a year to two years out during the highest points of panic last year was that a bunch of new shops opened. It's great. Now there's quality shops all over to take cattle to, and a thriving brisk local business in meat. More ranchers are selling directly to consumers and setting up all kinds of different vehicles for doing so, shares, quarters, etc
Great article.
The response locally here in the Midwest when many slaughter and butcher shops got booked for a year to two years out during the highest points of panic last year was that a bunch of new shops opened. It's great. Now there's quality shops all over to take cattle to, and a thriving brisk local business in meat. More ranchers are selling directly to consumers and setting up all kinds of different vehicles for doing so, shares, quarters, etc