Wallyworld treating business like business treats farmers?

Discussion in 'Homesteading Questions' started by texican, Dec 7, 2003.

  1. texican

    texican Well-Known Member

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    A new Wallyworld thread...

    From the last thread, this thought entered my head. People are complaining because Wally is forcing suppliers to meet it's price point. Either meet their price point or sell elsewhere. Usually in business, you name your price, after figuring out the cost of raw materials, labor, utilities, buildings, etc, and the profit level. Wally is threatening that, forcing businesses to compete harshly, basically naming the price their willing to pay for a product. Businesses to compete are sending the work overseas where labor is cheaper.

    This is sorta like what farmers and ranchers (and other suppliers of raw materials) have always been confronted with...buying their equipment and raw materials at retail. Then producing a commodity and selling at wholesale prices. Sounds backasswards from normal business practices doesn't it...Buy low, sell high. Commodity producers buy high, and sell low(buy retail, sell wholesale). When commodity prices are up, a profit is made, when not, there is a loss.

    Uncle raises hogs for market. Ex. feed cost alone is 35$/100. If he sells hogs at 40$, he makes 5$/100, or about 20 cents an hour for his labor. 30$/100 and he loses money. Not losing just minor wages, but money out of his pocket. How long would a regular business stay solvent doing this? Most would shut down, and indeed, he's scaled back his hog operations to hobby status. When oil prices were below 10$/barrel, lots of independents went out of business, capping wells, because it cost them 15$/barrel to produce.

    So, it's somewhat of a poetic justice, to see other industries and businesses being forced (coerced?) to follow the same system that farmers/ranchers/other commodity producers have labored under since time immemorial.
     
  2. Shrek

    Shrek Singletree Moderator Staff Member

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    I wouldnt know. I make compost and topsoil raised beds and scatter a handful of pumpkin seeds then let the vines grow unattended. I then harvest a few hundred pumpkins to sell for $1 to $2 each and use the profit from the sale to fuel my investment portfolio. I do the same with watermelons, cold weather crops and my truck garden proper. If the stock markets suck wind, I eat what I grow and make more compost. If the gardens suck wind, I invest heavily in walmart and other corporations and still make compost for when the farming improves.
     

  3. Beeman

    Beeman Well-Known Member

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    Texican is exactly right.
    And what caused this to happen to farmers? It used to be where local farms produced products for the local people. Now instead of a local meat market buying locally raised meat we have supermarkets buying meat from large packing plants in Nebraska.
     
  4. Shrek

    Shrek Singletree Moderator Staff Member

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    Farming is just as any other business. You compete, streamline if neccesary, alter operations to maintain profitability and if you can't compete, get the heck out. We got foolish farmers here who lost their hineys trying to farm a few thousand acres. Others got wise and streamlined their farms to less than 500 acres, lost the leased fields and put country clubs on the majority of "the family farm". Those that reduced the fields, diversified their crops and run the country club golf courses are successful. The ones nostalgically farming 3000 acres of whatever are not as financially successful in most instances. As times change , so must technique.
     
  5. diane greene

    diane greene Well-Known Member

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    This is actually a very complicated issue. If you look at the history of our government and it's farm policies you will see the deck has always been stacked in
    favor of agri-business style growth. The small farmer got screwed by the government and then the commerical market who got spoiled by paying so little for its food. I have great respect for anyone who can hold on to the family farm in today's world and not become the servant of Monsanto or Con-Agra.

    The average American household pays a smaller percentage of it's total income to buy food today then it did 25 years ago - the big looser in this game has been the American farmer.
     
  6. Hoop

    Hoop Well-Known Member

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    Farmers are engaged in "pure competition". There purpose is to produce as much product as possible.....at the lowest possible price......and hopefully make a profit.
    Farmers have had no control over the price of there products in over 100 years....the few exceptions being where farmers sell their products direct.

    Those going into farming understand (or at least should understand) this concept and all that it implies.
    In many cases, the real payoff for farming comes through land appreciation.
     
  7. Runners

    Runners A real Quack!

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    So true... my parents bought 250 acres for $66 an acre in the early 60s. People started moving out of the city, closer and closer. A half dozen years ago, the neighbor started selling his acerage for $7000. That send the taxes through the roof. When my dad died we were half way through incorporating, had we not, the taxes would have forced the sale of another family farm.

    If I had the money, I'd buy as much land as possible in Virginia... first farm land, then "retirement" land to sell to the Yankees.
    ------------------
    Texican said: "So, it's somewhat of a poetic justice, to see other industries and businesses being forced (coerced?) to follow the same system that farmers/ranchers/other commodity producers have labored under since time immemorial."

    Darn, I just posted this scenero in the other thread, here goes again. We've lost the texile mills to oversees (shoes, clothing), steel manufacturing, small appliances, now even veneers are being processed on ships and resold to us (lumber is not safe). What are the beef, swine, poultry producers gonna do when Wally World finally figures out they can set up a "better & cheaper" factory farm in China to stock their shelves? I can't wait to see what's gonna happen in Wally World to beef prices when the ban on imported beef is lifted (March?).

    Canada is just iching to flood our market with their beef! Hey! It's a free market, go by your imported beef at Wally World, screw the local butcher.

    Texican said, "This is sorta like what farmers and ranchers (and other suppliers of raw materials) have always been confronted with...buying their equipment and raw materials at retail. Then producing a commodity and selling at wholesale prices. Sounds backasswards from normal business practices"

    That's why your local Cooperative was invented - to help offset the backasswardness a little bit, increase the buying /selling / negotiating power of a farming community. (trying saying it 5 times out loud, real fast - "backasswardness" :haha: )

    Bill
     
  8. Jena

    Jena Well-Known Member

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    The government and the food supply are intertwined and no one is going to cut those ties too soon.

    If my crop fails, I get disaster payments to off-set the loss. If I don't like the market price at harvest, I can use loan programs to keep my grain and sell it later. If I like the price now, I can contract for next year. If nothing else, there is LDP, which I can count on.

    If I don't like the prices and don't see it as improving, I can cut my losses and sell out of that commodity. We sold most of our hogs a few years ago when the market went down. We are getting ready to start them back up again, in a smaller way.

    I've noticed lots more cattle in the odd lots around here. Prices are up, so people are putting that old cattle equipment to use, or putting a couple steers in the back pasture. When prices go down, those extra steers disappear.

    There are lots of tools out there to use to be successful at farming. One must keep up to date, keep learning and stay on top of things.

    I farm for the love of farming. I hope I'm building equity, but all that can be lost in a flash, same as a crop. I don't know anyone who farms because they are making a million dollars at it. I hear alot about corporate farms, but I've never actually seen one. Not around here. There are bigger guys here, that lease all the land they can get, but that is how they wish to do things. There is room for them as well as people like me, who choose to buy the land.

    I plan on staying in business for as long as I can. I don't doubt that I will be able to do so.

    Jena
     
  9. Marilyn in CO

    Marilyn in CO Well-Known Member

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    Diane Greene, I like how you think. :D We have had to get into the niche market of natural beef(contracting and locking in a profit), custom feeding and organic wheat to stay in farming. It was an easy switch because we totally believe in the principles of natural and we got into it(beef end) about 20 years ago when it wasn't even popular. The farmers who just see dollar signs and don't understand the ways of 'natural' don't make it. All the big farmers (1000 acres on up) are having a rough time around here and many have sold out. Here in Colorado you must add the drought and hail storms to the mix. I know we could not make it on just growing corn.....too expensive to grow and you get nothing for it.

    Yep, the farmer's odd way of doing business.......buying retail and selling wholesale is a pathetic way to do business......but we do it. :eek: Marilyn, the farmer's wife................
     
  10. texican

    texican Well-Known Member

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    I think most of the farmers here agree, my point being, if you survive as a farmer, you have to be efficent in ALL area to squeeze a profit. If you hold on to old inefficient ways of doing things, you'll go broke. Just like industries having to adopt to Wally's way of doing business, if they want their product on Wally's shelves.

    I tried farming a few years back in the 80's. Turned over a ton of money, but the net was small, for the amount of time and money I had invested. Stuck with personal use farming and ranching, and learning high value skills, so I could work a couple of days a month and bring in enough cash to cover expenses.

    Outside of cattle, in this area, most farm produce sales are one on one transactions. Being single, it was hard to work the tractor and the marketing both.
     
  11. Blu3duk

    Blu3duk Well-Known Member

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    What most people do not think about in the marketplace is the cheaper the food supply the less chance the people will look up and throw out the corrupt government politicians who have embedded themselves in a sweet retirement plan at the expense of the people they were elected to "serve" not "service in the animal husbandry sense".

    The hordes of people who have a full belly because the american farmer has overproduced and had to sell his crop at a loss again, and take those government subsidy payments, is not to blame totally for the mess we are in... that farmer is just doing what seems right cause the nieghor over yonder got twice that paycheck last year after his crop didnt come in at all......

    And then there is good ole Sam Donaldson, owner of a flock of Mohair producers, making nearly a quarter million a year from the governemtn subsidy... at least he pays some cheap labor to take care of his flock. But we bring it all on ourselves in the long run, everyone who buys a foriegn made object for a lower price contributes to the decay of the american workplace and the eventual doom of the republic that once was as we spiral into the everincreasing socialism bigbrother government of today. May Almighty God forgive us of our ignorance one more time.