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Comment by empath75 | Hacker News Reader

So it turns out that trade wars are bad?

The article says bankruptcies have "increased steadily" since 2014. It does mention China, and the trade war, but I think when they say "falling commodity prices" they are referring to a longer/broader issue. But it doesn't say why else commodity prices are falling, and I'm be happy if someone enlightened me.

The value of brand is rising which increases the prices paid by consumers for commodities. This makes people buy less of the underlying commodity and more of the overarching brand.

Think about coffee. It’s a commodity. But more people are spending $4-5 on a single cup instead of $4-$5 on a pound of grounds. Spending power does not match price change.

A good historical case study is Standard Oil. In an effort to stabilize prices and reduce peaks, Standard oil established last mile delivery for refined oil. People bought Standard Oil at the grocery store. Standard didn’t start buying oil wells until 20 years into the company after they had pressured prices down to the bottom.

Grains are sold as a bulk commodity. The sale typically takes place at a "grain elevator" where the grain is dumped into a shared storage pool by the truckload.

I'm not sure how anything about brands could apply. Any "brand" ends at the grate where you dump the grain.

Similar with other ag products. Remember how we just had that E. Coli outbreak in lettuce and nobody had any idea for several days where exactly it came from, so they had to broadcast the warning across the entire nation?

One issue that was talked about some years ago and has sort of fallen off the news cycle was overcapacity for maritime transport. That could have contributed to it, or maybe it's another symptom of the underlying cause.

https://unctad.org/en/pages/newsdetails.aspx?OriginalVersion...

It is known as the declining rates of profit. ( https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit... )

An oversimplified explanation would be that each buisness has an incentive to undercut their competitors and by doing so decline the profit margins for everyone.

Well, and "depressed prices on farm goods such as corn, dairy and soybeans are also likely leading to a spike in Chapter 12 filings, according to the report."

Losing half the US market for soybeans to a trade war probably played a role in those sorts of price movements: https://www.motherjones.com/kevin-drum/2018/11/soybean-expor...

edit: /u/WillPostForFood points out this report ends prior to the tarrifs. My bad. Their effect will be in subsequent reports.

The article and other sources report the majority of bankruptcies are in the dairy industry. It’s the result of US-Canadian trade disputes and overcapacity in the dairy industry which precedes the dispute. The CAD-USD exchange rate doesn't help either.

A gallon of 2% milk in Canada is about double the price in the US. I think its reasonable to assume that if Trudeau can't bring retail food prices down and resolve this dispute he's going to have to go back to surf boarding and substitute teaching in 2020.

Comparing the price of milk and Canada versus the US isn't a 1:1 comparison. Canadians pay much less in taxes to support their dairy industry than Americans due to supply management in Canada (i.e. not producing more milk than needed, paying for that production through subsidies, and then wasting it). So, in-store higher dairy costs in Canada are closer to true production cost than in the states.

There are a lot of other factors here too, one being that during the 70-80s American agricultural legislation focused much more on large scale farm operations than Canada and as a result it is much harder for small farmers to get by in the US.

Regardless, even with all other factors being equal dairy costs would still be slightly higher in Canada since due to generally higher taxes and higher farm wages.

> he's going to have to go back to surf boarding and substitute teaching in 2020.

Lol, nothing like downplaying the achievements of the literal leader of a country ( one of the most successful possible positions for a person ).

I wonder how much of that is changing tastes away from dairy and towards things such milk replacements such as almond milk.

The timeframe of the report is 2014 to June 2018. The trade sanctions with China didn’t happen until July, so probably unrelated.

Good point, I missed that.

The next report may be a doozy, then.

Not for everyone.

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