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10The following appeared in a letter to the editor of a Batavia newspaper.
"The department of agriculture in Batavia reports that the number of dairy farms throughout the country is now 25 percent greater than it was 10 years ago. During this same time period, however, the price of milk at the local Excello Food Market has increased from $1.50 to over $3.00 per gallon. To prevent farmers from continuing to receive excessive profits on an apparently increased supply of milk, the Batavia government should begin to regulate retail milk prices. Such regulation is necessary to ensure both lower prices and an adequate supply of milk for consumers."
In this recommendation, the editor of newspaper claims that Batavia government should regulate retail milk prices because of farmers continuing to receive excessive profits on supply of milk. To support this assertion, the editor cites the increasing number of dairy farms and the enhanced price of milk in Excello Food Market. Although this argument seems specific, while we inspect it closely it reveals several unwarranted aspects.
First of all, the editor incorrectly assumes that the increasing number of dairy farms is equally the raising profits .Maybe, although the sum of dairy farm have increased ,it is possible that the scale of dairy farm has been greatly decreased. So only considering the number of farms can not demonstrate that farmer get much profits. Even if the scale of diary farm are all increased ,it is roughly to conclude that dairy farmers' income is increased ,for example, as for promoting income though dairy, farmer did enlarge their farm yard. Yet since the special taste of the local dairy production so the sum of consumers is limited. Although the scale of dairy farm has been enlarged, this is not only uselessly for taking extra profits for dairy farmer but it will spend large sums of money on enlargement of dairy farm.
Secondly, by citing the price increased in Excello Food Market (EFM), editor can not convince me that the diary production price in different places is increasing too. For one case, the EFM is located in the economic center, so this supermarket pay much money on renting .For balance the income and outcome of supermarket ,the manager of this EFM must raise up the price of the production in the market .According to this analysis, here is not profits change to farmer. On the contrary, without extra spending, some markets located far away from economic center of Batavia may not mark high price on milk production. From this point, it is roughly to say the raise of milk price in EFM can reflect the profits dairy farmer have.
Even if it is true that dairy farmer get more profits than once was, if want to prevent farmers from receiving excessive profits, the way to regulate the retail milk prices may not work. The retail price is one part of the economic chain. Facing large diary needs, farmer can still keep the price at which they sell to the milk producer. For keeping the profits, milk producer may decrease the spending on package, transportation and advertisement. In the end, the farmer may have the same profits or even more because of the low retail price which cause consumers buy much more diary goods.
In sum, this recommendation relies on certain doubtful assumption that renders it unconvincing as it stands. If the editor wants to persuade Batavia government to regulate retail milk prices for limiting the profits in dairy, the following demonstration should be provided. One is the scale and number of diary farm. Except that, to have better assertion, a survey about the milk price of all markets in Batavia is necessary. The last one is that report should consider other aspects which may influence the price of diary. |