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Comment by zionic | Hacker News Reader

If burgers cost $45 you’d see an explosion in cattle farming. That would put the value of a cow over 6 figures. All the crypto miners would be buying cattle at that rate.

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No, because that's the quoted increase in price assuming the same profit as today. That is, that's the actual production cost of the meat give or take a few percent. Today much of that production cost is payed by the US government or local state governments through subsidies, water rights etc.

Note: i have no idea if the $45 is realistic, but the principle is there - much of the production cost of meat is payed by the state. The price of meat would increase if this practice stopped because without any increase in profits.

That's someone's opinion of the actual price, based on their opinion that the "water rights" ought to be more expensive because they think it would produce change they happen to agree with. In their opinion it ought to be a lot more expensive in other ways too.

But despite their opinion, no, it isn't that expensive. That sort of analysis heavily relies on telling you what you want to hear, and expecting that you won't dig into the analysis and realize that if you applied the same standard to everything else in the world you'd get absurd results all over the place.

Sure. But the point is still that this kind of cost increase would not result in cows becoming more profitable, by definition.

No, burgers would cost $45 because cattle farming would be unsubsidized and very expensive. It wouldn't just be a random $40 tax on burgers, that's obviously counterproductive.

I think the point is that $45 is a made up number to push a point. An unsubsidized burger would obviously not cost $45.

Edit: OP clarified with a source below that it would be closer to $15

Making up numbers doesn't seem like the best way to prove a point.

Welcome to the internet

It may not be the best way, but hyperbole is an established rhetorical device.

I believe the implication is that if burgers cost $45 there would be a lot less demand. Its not like McDonalds would suddenly have 10x revenue from $45 Big Macs.

Subsidies are keeping cow COGS artificially low. Removing them would increase the cost to raise a cow; selling it for more money does not necessarily lead to more profit. This is the difference between gross profit and net profit... and we're not even taking into account what the market is willing to pay for a burger in the first place.

No, the high cost would start with the cattle ranchers. And since the consumer simply would not pay $45/burger, the demand would fall to almost nothing. Cattle ranchers would decide it wasn't worth doing.

It would start further up the chain with commodity farmers providing the feed.

Ok, true. But regardless of where it starts, there would not be one spot where one part of the chain was making some huge profit. Thus, it wouldn't be as the parent poster suggested (for the feed producer or the cattle rancher).

It's not like there wouldn't be any more cattle ranchers. If say a subsidy on cattle production were removed today, the ranchers would refuse to sell to restaurants and distributors at the low price they do today and agree on some price they can break even at. Anywhere offering burgers would have to do it at a much higher price to break even. Many less consumers would likely choose to purchase them, decreasing the demand for burgers, causing a decrease in demand downward until things balance out.

Related would be the conflicting effects on supply of less economies of scale vs being able to utilize only the most efficient means for production (e.g., only the places most fit for it would be producing cattle, meaning that the marginal cost would be lower than in the previously utilized high cost areas, although this wouldn't be sufficient to counteract the original shock, it might help balance the other effects.)

No, for a couple reasons. The way a burger would get to its true cost is by imposing true costs upstream. If cattle ranchers actually had to pay true costs, their profits wouldn't be higher. Indeed, a $45 burger would cause a drastic fall in hamburger demand, causing a net decrease in ranchers.

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