Things like this mainly occur in markets with little competition, killing of small business causes issues like this. Much of our grievances are caused by our high level of market concentration.
This is a familiar story and you probably know the ending. There’s a big market (egg producers selling eggs to supermarkets etc.), and there’s a small market (egg producers selling extra eggs to each other on an electronic exchange). The price in the small market determines the price in the big market. Participants in the small market are also participants in the big market. You can spend a little money in the small market to move the price, which can make you a lot of money in the big market.
Not defending the bad actors here, but there's that whole "show me the incentives and I will predict the outcome" thing. If the market structure rewards manipulation, you get manipulation. The market structure doesn't have to be this way.
If power is more diluted among a greater number of participants you are way more likely to see defectors, which would provide accurate pricing data to the market and cause the conspiracy to fail.
There are supposed to be two stopgaps here.
First, the fear of going to jail for committing crimes. Secondly, the social reprisal for committing crimes that hurt people.
Like seriously these CEOs shouldn't be welcome at anyone's table or gathering in polite society as a result of their actions, bare minimum. The government should also put them in prison.
Hiding behind a faceless corporation certainly helps with that somewhat, but in this case one of the egg companies involved isn't shy about telling us exactly who they are (https://hickmanseggs.com/about/). When there's no longer a working legal outlet for justice how long before people start leveraging the technology they have to identify the people who are hurting them and make their feelings known. We need a functioning legal system and accountability to keep things from getting out of hand, so it concerns me that corruption has been allowed to flourish and go unpunished.
What is the point of signing a direct supply contract if you are just gonna be paying spot prices anyways? I suppose guaranteed supply priority?
It’s near universal for variable interest rate loans.
I think that’s partly right but it’s much broader than that. The incentives in capitalism in general very frequently don’t line up with what’s best for consumers or even humanity. There are numerous industries where the financial incentive to drive down cost (poor quality products) and increase price (consumer strain) is sooo strong. Far stronger than weak regulatory incentives.
So while you’re right, that’s kinda the whole point of the article too.
Even without the market structure, the incentives are not aligned to make the cheapest possible yet high quality eggs for consumers. I mean in what universe does that make more profits for companies. But that would be better for humans. You’re right, we should care that the structure of the entire economy is deprioritizing what’s best for humans. It’s supposedly only the best structure we’ve found so far.
I mean sheesh. The fines for bad behavior like this need to be like N + some % of N. Where N is the profit they made (MINIMUM), and you scale the % of profit based on how bad the issue is. Companies aren’t people. They can take bigger fines. Investors just need to account from it before they spend millions upon millions in extravagant excess on criminal CEOs like these.
There's a pipeline for that, and that pipeline has been broken, so that'll dry up. It's gonna take some years before we see the effects of it, but it ain't gonna be pretty.
It is a form of farming subsidy that was specifically structured to avoid passing money through the government, and structured to control price volatility.
This is separate from the commercial market concentration in Canada, which is definitely real. To a degree, this is just the reality of being a smaller market. The depth and breathe of the American economy is definitely at play here.
If you compare Canadian super market consolidation vs Germany or UK (for example), you find a much more similar situation.
In fact, most markets naturally go from high competition to monopoly or oligopoly. You can see this in chips, cars, airplanes, steel, ecommerce(Amazon) and beyond. Indeed, many oligopoly situations only fail to be monopolies through either antitrust activity or through nation-states supporting their competitors (chips).
Agriculture in particular tends to be geographically dispersed so it's harder to have absolute monopolies. But some "harking back" claim of "if we only had small business, all the predatory stuff wouldn't happen" really fails to understand the dynamics of markets. Scale in agricultural production is what allows the low prices you get in stores - But $10 cage-free organic eggs are available at my local coop for those who love small businesses (though I prefer the $2 cage free eggs at nearby Grocery Outlet).
The actual economics in highly competitive markets depend on what is known as the Minimum Efficient Scale, which in turn depends on the shape of the cost function.
https://medium.com/@justin.tan/qb-house-back-to-basics-busin...
But we live in a too big to fail, regulatory capture environment.
The '90s didn't help a lot either. cf. the repeal of Glass-Steagall[0] which, arguably, did much more to damage the US economy (there's a direct line from its repeal to the 2008 financial crisis) than a lack of anti-trust enforcement.
That said, dismantling anti-trust enforcement (which was pretty hit or miss anyway) didn't help either.
[0] https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_legisla...