4 ms·

If you raise the base cost of production in a low margin case like agriculture, then the price of the good must increase or they would be running at a loss.

by pitaj 5y ago

notfromhere 5y ago
Agriculture is incredibly subsidized, which means cost of production and cost at point of sale do not have a tight relationship
erikpukinskis 5y ago
Yes, but the amounts are tiny. Would you pay an extra 10 cents a pound for your produce? That amount would be life changing for farmers. But the market will always find the place where the work is unbearable and stop just shy of that.
- f6v 5y ago
  > Yes, but the amounts are tiny. Would you pay an extra 10 cents a pound for your produce? That amount would be life changing for farmers. You underestimate the percentage of the income some people spend on food. That's why agriculture is heavily subsidised.
  - erikpukinskis 5y ago
    I didn’t estimate that.
danbruc 5y ago
Of course, but if everyone pays $1 more then the wages can increase by $10 assuming 10% of the population works in agriculture which still leaves them $9 better off. My point was just that a wage increase is not nullified by the price increase as long as not everyone is working in the fields.
- chongli 5y ago
  if everyone pays $1 more That’s a collective action problem. You can’t get everyone to pay $1 more. If your strawberries (for example) cost $1 more per pint then your sales will drop accordingly. It doesn’t matter if all strawberry farms agree to pay more to their strawberry pickers. You aren’t only competing against other strawberry farms, you’re competing against all other food. If strawberries are too expensive, people will eat candy or potato chips instead.
  - danbruc 5y ago
    So it turn out that people or not willing to pay what it costs to produce strawberries at a wage level at which people are willing to do the hard work. That's fine. The farmer should try to lower the costs by automation or switch to producing potatoes for those potato chips.

If you raise the base cost of production in a low margin case like agriculture, then the price of the good must increase or they would be running at a loss.

by pitaj 5y ago

If you raise the base cost of production in a low margin case like agriculture, then the price of the good must increase or they would be running at a loss.

notfromhere 5y ago

Agriculture is incredibly subsidized, which means cost of production and cost at point of sale do not have a tight relationship

erikpukinskis 5y ago

Yes, but the amounts are tiny. Would you pay an extra 10 cents a pound for your produce? That amount would be life changing for farmers. But the market will always find the place where the work is unbearable and stop just shy of that.

f6v 5y ago
> Yes, but the amounts are tiny. Would you pay an extra 10 cents a pound for your produce? That amount would be life changing for farmers. You underestimate the percentage of the income some people spend on food. That's why agriculture is heavily subsidised.
- erikpukinskis 5y ago
  I didn’t estimate that.

danbruc 5y ago

Of course, but if everyone pays $1 more then the wages can increase by $10 assuming 10% of the population works in agriculture which still leaves them $9 better off. My point was just that a wage increase is not nullified by the price increase as long as not everyone is working in the fields.

chongli 5y ago
if everyone pays $1 more That’s a collective action problem. You can’t get everyone to pay $1 more. If your strawberries (for example) cost $1 more per pint then your sales will drop accordingly. It doesn’t matter if all strawberry farms agree to pay more to their strawberry pickers. You aren’t only competing against other strawberry farms, you’re competing against all other food. If strawberries are too expensive, people will eat candy or potato chips instead.
- danbruc 5y ago
  So it turn out that people or not willing to pay what it costs to produce strawberries at a wage level at which people are willing to do the hard work. That's fine. The farmer should try to lower the costs by automation or switch to producing potatoes for those potato chips.