286 billion Farm Aid Bill for 2008

[tolbiny]

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what i mean is that the bell curve of production would be centered at less than "enough" food, so that supply will sometimes exactly meet demand (right tail of curve), and the rest of the time the lesser supply will result in higher prices/profits. in other words there's no market incentive to center the bell curve of production to meet demand.

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This is wrong simply because there isn't just one farmer meeting the markets demand. If all farmers are under producing to create higher prices the very first guy to think "hey I can produce a little more, have a negliable effect on prices and make out like a bandit" wins the game (ie makes more money than the other farmers). Producers are in competition against each other, not in cahoots.

[PLOlover]

[ QUOTE ]
This is wrong simply because there isn't just one farmer meeting the markets demand. If all farmers are under producing to create higher prices the very first guy to think "hey I can produce a little more, have a negliable effect on prices and make out like a bandit" wins the game (ie makes more money than the other farmers). Producers are in competition against each other, not in cahoots.

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well, let me put it another way. we're both right here because what will happen is that the market will fluctuate between undersupply and oversupply (like you said, if there is an undersupply and high prices, farmers will produce more ...), but, like I said, there will be a lag time of up to 6 months to a year because that is the crop cycle. if the crop cycle was only one day then the fluctuations would be very little.

my point really is that the subsidies eliminate the fluctuations.

I mean, that makes sense, right?

[Money2Burn]

[ QUOTE ]
[ QUOTE ]
This is wrong simply because there isn't just one farmer meeting the markets demand. If all farmers are under producing to create higher prices the very first guy to think "hey I can produce a little more, have a negliable effect on prices and make out like a bandit" wins the game (ie makes more money than the other farmers). Producers are in competition against each other, not in cahoots.

[/ QUOTE ]

well, let me put it another way. we're both right here because what will happen is that the market will fluctuate between undersupply and oversupply (like you said, if there is an undersupply and high prices, farmers will produce more ...), but, like I said, there will be a lag time of up to 6 months to a year because that is the crop cycle. if the crop cycle was only one day then the fluctuations would be very little.

my point really is that the subsidies eliminate the fluctuations.

I mean, that makes sense, right?

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You are right, but you are overlooking the fact that different areas grow the same crops at different times, so when farmers in one area see that there was a small crop in the area harvesting before them they automaticly adjust their production numbers so the lag is very short.

[PLOlover]

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You are right, but you are overlooking the fact that different areas grow the same crops at different times, so when farmers in one area see that there was a small crop in the area harvesting before them they automaticly adjust their production numbers so the lag is very short.

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you got a good point.

still I think there's a strong public interest in the food supply and a very much lesser subsidy amount makes sense. It's the realest of the real economy.

. I mean, how much is the financial sector subsidized when all is said and done, and it's not even in the real economy, it's strictly financial.