Law For Food: The law affects what you eat. What you buy to eat affects the law.

Energy, Ethanol, and Commodification

Via Ethicurean, a story about how the farm lobbies are split on the subject of bio-fuels such as corn-derived ethanol contains the following remarks:

Corn farmers are pushing for more ethanol production as the industry creates an enormous market for their crop, giving corn prices the kind of lift they haven’t seen in years. But the corn farmer’s win is the hog farmer’s loss. Meat, dairy and other food producers are pushing back against the ethanol boom as higher grain prices cut into their already slim profit margins.

My B.A. professor had an expression that she would use when talking about company managers and directors who got into trouble by bringing in the sorts of investors who are known for hostile takeovers: “when you sup with the devil, bring a long spoon.”

I can remember a conversation I had with Randolph at Neal’s Yard Dairy in which he pointed out that farmers who are making milk for commodity cheese are, one by one, going out of business: they are in many cases being pushed out of business by their customers, who demand lower and lower prices and slimmer and slimmer margins. Randolph rather proudly noted that the only diary farmers who were still making a sound living in the U.K. were the ones who took the care and time to make high-quality milk for handmade cheeses and the specialty food market generally.

The upshot of these three ideas in juxtaposition is that selling on the commodity market is a dangerous business. What matters is whether your product is differentiated in its market, and whether your product is made from raw inputs which are themselves differentiated within their market. If you are producing or processing commodified raw inputs, you are almost entirely at the mercy of the market. Where U.S. food producers have chosen to emphasize haste and quantity and uniformity over quality and health and flavor, they are in a commodified market, and they should have brought a longer spoon.


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