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| MOOOOORRRREEEE YIELD!!!!!!!!!!
The entire system from Governement support to equipment/input purchases to grain sales are all geared toward more benefit coming w/ MOORREE Yield. Lets compare our business to other Manufacturing businesses.
Corn Manufacturing vs Widget Manufacturing...
Corn:
-Fixed costs are "fixed" except when looking at them on a "per unit of production" basis--then more production(yield) equals less "per unit" cost.
-Expansion(true expansion) adds to production/output, but is hard to find w/out added(usually too much) cost.
-Labor cost is included in "fixed" cost in my opinion as added labor doesn't directly coorelate to added production in Corn Manufacturing like it typically does in Widget Manufacturing.
-In Corn Manufacturing "Variable costs"(fert, seed, chem) are very similar to fixed costs as typically we apply those inputs once/twice per manufacturing cycle(as apposed to per widget)
-"Run Time"(could be termed otherwise) in this example is defined as the time it takes to move one Manufactured unit from start to finish. It takes an entire growing season to produce 1 bu or 13,000,000,000 bu, so there is plenty of incentive to maximize production given the fixed time table.
Widgets:
-Fixed costs are "fixed" except when looking at them on a "per unit of production" basis--then more production(widgets) equals less "per unit" cost. The Widget Manufacturing process, however, is engineered/designed to produce a realitivly(compared to corn) fixed number of widgets in a given period of time.
-Expansion(true expansion) adds to production/output, but is hard to find w/out added(usually too much) cost. Widgets and corn are similar here.
-Labor cost is included in "variable" cost in Widget production as more labor cost(generally) results in more output. Example: 2 shifts vs 3 shifts.
-In Widget Manufacturing "Variable costs" are more accurately described as the cost is highly dependent on production. Example: wood, glue, screws, nails, etc used to manufacture widgets are not used unless more widgets are produced as a result.
-"Run Time"(could be termed otherwise) in this example is defined as the time it takes to move one Manufactured unit from start to finish. It takes an certain amount of time to produce a widget--which is typically measured in minutes/hours(not months). Thus, there is incentive to focus on efficiency of the process rather than Expansion which typically requires added fixed cost(as in corn manufacturing).
All this said, College ECON 101 Teaching Assistant said,"there are no truely competitive markets anymore, outside of (maybe)production agriculture, as most industries have few players controlling most of the resources/production capacity." So we in production agriculture, as we compete w/ corn manufactures everywhere, are driven to maximize production in our individual businesses because we do not control enough resources/production capicty(individually) to (alone) alter the price at which we can sell our production.
Problem will never go away, unless 3 farmers farm the state of Illinois and same throughout the cornbelt(not at all likely IMO)--then perhaps the individual businesses involved in production agriculture will gain "pricing power." | |
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College economics and the grain markets.
