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| If inputs (fertilizer, fuels, seeds, land prices) go up and, as always, the same risks are still out there (Mother Nature et al). On a large scale, is it logical to assume that high input costs, even if accompanied by high commodity prices, could make farming less productive because farmers can only take so much risk?
In other words:
Scenario A (low input costs): it costs $1 to produce 100 quumquats and potentially earn $5
Scenario B (high input costs): it costs $2 to produce 100 quumquats and potentially earn $10
If mother nature strikes, you lose $1 in scenario 1 and you lose $2 in scenario 2. If a farmer can only afford to lose $1, then they're going to produce less quumquats. Afterall, they'll still get $5 if the market & Mother Nature cooperate.
Any thoughts would be appreciated.
Edited by tomasdolby 10/29/2008 15:18
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risky farming?
