Achieving objective thinking requires considerable moral distinction, a station only achieved at significant cost. Why is the cost of thinking objectively so high? The cost is high because when one compares the ease of rationalization to the harshness of factual assessment, ease holds great sway. Objectivity turns the mind to introspection, to strict accountability and away from an easy excuse, tradition or subjective rationalization.
Since 2005, fresh-potato growers have been trying to objectively correct their declining industry such that market-risk is minimized. The approach has focused mainly on matching supply to demand such that price stabilizes. With trend-line yields increasing at the rate of 5 cwt per acre per year but also with U.S. price-positive consumption declining by over 1.25 million cwt per year, this has not been easily accomplished.
Doing the math on a farm-by-farm basis, to accommodate the above dilemma, each U.S. fresh-potato grower would have to reduce production by approximately 2.7 percent each year for fresh-potato pricing to stabilize. Objectively, this appears to be only a matter of having each grower drop out a few acres each year. However, subjectively, each grower is an independent thinker, managing his farm’s business plan in what he believes is his own best interest. If a grower desires to increase production against the 2.7 percent rule, the added volume he will introduce to the market will naturally result in an incremental decrease in the value of not only his crop but a decrease in the value of the nation’s crop as well. There are no exceptions to this basic economic rule.
Everyone knows that an objective thinker conforms life to rules and that a subjective thinker conforms rules to life. Conforming one’s potato production to the rule that a 2.7 percent annual, across the board production reduction keeps potato prices in the black, happens to be among the most valuable knowledge points that a fresh-potato grower should include in his farm’s business plan. How many potato growers do you know that figure in a 2.7 percent annual production decrease so they can keep the potato-producing portion of their operation profitable?
This year’s disastrous potato prices tell us something that is sad but true: Failure to acknowledge the intransigence of the 2.7 percent rule wreaks havoc with the bottom line. This fact comes as near to an economic absolute as untold hours of market and production tracking can produce. It is as close to absolute as any agro-economic principle can be. What does this mean?
It is likely that many growers won’t see this article while others will chose to not heed the facts. Acknowledging and conforming your potato growing practices to proven economic principals and fundamentals is a sound and mature strategy. Trying to outguess the market or out-smart Mother Nature is not. Which strategy do you employ?