Market pricing working in the hay market! Attn DaveII

DaveII quote on my hay thief posting below.

" Wasn't satisfied just double/tripling his prices like the others............. "


Dave really seems to have a real problem with how the free market works. Maybe in Germany, where it is much more socialist, things don't don't follow supply and demand. Here in the good old USA the free markets still works.

So when things are in tight supply the price goes up and demand falls. People will look for other things to use and ration what they can't replace. Therefore making it through a tight supply. If the commodity was left cheap then no rationing would happen and the product would be completely depleted. Then everyone would suffer more.

Also a higher price on a commodity will make it more likely that the supply will increase and then the prices will stabilize and come back down. More hay will flow to the highest price location. Plus next year there maybe more producers.

The livestock people in Texas have to have feed. I am sure that the local price of all feed sources is many times higher than before the dry weather. If these feed/hay prices did not go up how would the hay that is raised in North or South Dakota get to those livestock people in Texas???

Lets assume that average grass hay was $80 per ton before the drought in Texas. Then assume same type of hay was $80 per ton in the Dakotas. It is 1160 miles from Bismarck, ND to Dallas, Tx. Average semi fuel mileage would be right around 6 mpg. So that is 193.34 gallon of fuel one way. Average diesel price in the mid-west is $3.89 per gallon. So 193.34 x $3.89 = $752.07. The average driver will be paid $.40 per mile on a long haul. So that would be 1160 x .40 = $464.00. I usually figure .35 per mile for tires and other maintenance. That would be 1160 x .35 = $406. Also the capitol expense and profit on a semi is usually about the same as the drive cost. So lets add $464.00 to the truck owner.

Fuel cost $ 762.00
Maintenance $ 406.00
Driver $ 464.00
Owner $ 464.00
total $2096.00
Lets make the load of hay be 27 ton.

27 x $80 = $2160

Add the transportation cost and the hay at an equal price and you have $4256.00. This would be the delivered cost. The price per ton would be $157.63. So this would be almost double the local pre-drought cost.

So I guess using how Dave seems to look at this anyone hauling the hay for this would be a crook!!!!!! They would be charging double for the hay. Even though they where just getting the same as before.

Am I alone in thinking that someone in the above situation would need more than the standard price to make the extra work and risk to haul/sell the hay in Texas?? Either the hay producer is going to charge more or the hauler/company is. That is the only way that any more hay will flow to where needed. If you leave it just at equal than a very small amount would flow to where needed.

Some one has to take an additional risk and be rewarded or no one will do it. Also some of these guys will loose money when this market changes. They will go and buy it after the rains hopefully start and then not be able to get the higher price out of it. The same thing is happening right now in the grain producing areas. The rents and land sales are sky rocketing. These all need high commonities to work. When the prices fall there will be a period of high losses until things stabilize again.

Please don't talk ABOUT me when you can talk TO me.Makes you look like a couple of the other guys around here that get em in a wad and try to gang up... I think you have a little more balls than that.
Now, for your OP, I don't have a problem with free market, my problem is with crooks. We have em here too. Example...
Hay from joining flelds (2 people)... Same grass, same size rolls, same time... Folks got about 60 percent 1st cut this year. 1 guy is a crop farmer with some grassmeadows that he maintains as needed and puts up/sells hay to even things out some. He got 40% less hay so raised his price on the 1st cut by that amount. The other guy ran around and bought up all he could from the reasonable folks, and priced it at almost twice what he paid, even priced some leftover last year hay along with it, and took advantage (tried) of the fact that he had the only hay in the area.... A crook would call him a smart guy and stick up for him while the folks that he scavenged from calls him a crook and won't deal with him again.... He also has plenty of the hay left and is having a hard time getting rid of it at the price he bought it for..... This was all in about a 10 mile circle so transportation wasn't much of an issue...

Bottom line is.. a crook will be a crook and an honest man (person) will be honest no matter the circumstances/merchandise.....

Dave I think you are proving the point, 1 man tried to corner the market(he was free do do so)but most of his "to be customers)found anouther supply or did without, driving his price down. If I read the post right, the free market worked perfectly, and next year he will sell his own hay only.

A secondary goal within the freemarket system requires producing a sellable product. It's part of the demad of supply & demand. If an industry is unable to produce aproduct at a price the market can actually afford, there is no demand. If a farmer in Texas is unable to purchase hay for $80 a ton, he may buy it for an icreased price out of the Dakotas, but if that hay is to expensive, he will simply start selling off livestock. I don't know if Dave2 is a socialist, communist or simply a capitalist. To be honest, it doesn't matter, as the concept that goods and services do not have a market if the cost is greater than the market can support is common to all three methods of view economics. How many times have we heard economist speaking about the current unemployment refer to the high cost of government regulation driving up the cost of doing business. Those making these claims are considered firm hard capitalist. If the farmer in Texas were to pay $200 for hay, as opposed to $80, how much would he need to sell his beef for inorder to make any profit? The market can only absorb so much increase in Beef, before people stop buying it. Taking as a whole JD, I don't think his remarks would call into question whether he is a socialist. There is no more capitalist a veiw than to watch out for high cost with low returns.

Dave I am talking to YOU. You seem to have blinders on about anything that you buy or sell. You sell a tractor and when it blows up on the new owners then you are shocked that they contacted you. I did not hear you say you gave them any money back. If you have to buy it you are always complaining about how you are paying too much. Then don't BUY IT. You where complaining about higher hay prices but if I remember right you got it cheaper. So you never paid the higher price to start with. It just seems that many times you seem to play both sides of the fence. Sell high and buy cheap but if anyone else does that then they are crooks!!!!

The guy that bought the hay at the lower price and is trying to selling for a higher one is not a crook. He might be a bad business man but he is not a crook. He PAID what the others wanted when they sold it. Then they got mad because they may have priced it too cheap. It would seem that the hay never sold for the higher price. You are saying he still has much of the hay in inventory, not sold. He speculated that the hay price was going to be higher or supply lower. It would seem that it did not have a higher value or short supply. He has not received it and the original seller did get the lower price that seems like it might have been close to the real market price after all.

Many of us on here buy and sell all kinds of things. We have to make a profit or we will not be able to keep doing it. In years past I have bought hay and resold it. There where a few years that I did double the price of the hay. I paid the hay owner/sellers right at harvest, cash money done deal. Then I took a risk and stored it and resold it the next spring for a profit. I have also bought hay and not made much at all if the winter happened to be a mild one. The original owners could have took the risk and waited to see what the market was. They instead chose to take a lower price with lower risk.

I had a guy come to me with several tractors. None of them where running. I asked him if they had ran recently he said he did not know. I told him I would not give him as much without knowing the condition of the motors. I even offered to get them running if he wanted to pay me and then help him sell them. He refused, he wanted the sure money with no extra investment or risk. I paid him about half the market price for them. It turned out they all where easy to get running. So I made very good money on them. So does that make me a crook because I did not give him market price and then gamble that they would be alright???

What started me was you making the insinuation that selling hay for two or three times the purchase price is crooked. I have never been able to FORCE anyone to buy something. If it is too high just don't buy it.

Jd, I know we often disagree. That is how it works. I say something that you think is wrong and you say so. I then rebut and so on. That's not a problem. It introduces me to new idea or method, and it gives you a new way to view something, but it reads as if you simply don't like Dave2. You're free to dislike anyone you want, The list of people who I don't like, and who don't like me is not a short list. You have to know, however, that if a post appears to be driven by a dislike, whatever arguement tends to get lost. He wants to buy cheap and sell high, which makes him about the same as everyone else around here, myself included. If he buys cheap, and is unable to sell high, he not thrilled, as I would not be either. I'm not seeing how any of that equalls Dave2 is bad.

If I could sell hi and buy cheap.... I wouldn't have anything to complain about :roll:

You gotta know if you are a crook or not..If I knew/dealt with you personally, I'd let you know my judgement without mixing words... What I see/read on here, you seem OK.....

Insinuating that I'm a socialist or whatever you throw out there just because I chose to stay over here doesn't make you look real favorable tho.....

I only got a couple hours sleep the last couple days and am a little cranky... Let's just agree to disagree and get a fresh start later.....

The problem I have with price hikes on anything is that when the dust settles, the settling price is usually much higher than the original price and the consumer just pays it going about their business as they are so happy it's not where it was.

On weather driven commodities, one can understand hikes, but on things like petroleum and market thiefs er-ah speculators/analysts, that's not the case.

Back to the old axiom: Whatever the traffic will bear, not what is a decent profit and I am here to help my fellow man and make a reasonable profit for my toils in the process. Argh!

Mark

Bob I don't dislike Dave I actually like to see most of his posting. It just is that he has commented many times about hay cost. An being crooked if you try to buy and sell it for a profit or at least the local guy there. Maybe the local guy is a crook.

Dave we all are just mostly a bunch of cranky old men on here. LOL. How would you like to try to ride herd on all of us??? Go get some sleep and we will argue more later. It seems to be a big pass time for many of us.

I at least seem to be done with the Deer idoits for this year. You I feel sorry for with all of those pastures around so many people. I like not being able to see my neighbors. In the winter after my Dad heads to Florida I don't have a neighbor within all most a mile. I like it that way. I guess my retirement dream is starting to lean toward hermit. LMAO

As far as the tractor goes, Neighbor kid is gonna fix it for them for a good price, between his discount and my taxfree status, parts are half of what they would have been charged so they are happy to get them at half price and cheap labor......
Now, if I could just find a cheap front loader :roll:

On that note, however, I feel safe saying that in this part of Tenn, whatever draught we had is over. We had rain the first half of last week, and my pond is still pretty full. I'm just say, "No Draught, Plenty of hay, No need to truck it in, Everyone wins" Now if Governor Perry can cast down some idols and start recognizing, they can have some rain.

Another way to look at it Dave is about them puppies you posted the pictures of.
Nice looking pups. If my memory serves they are Australian Shepards? For the sake of conversation let's say they are.
If I looked around for AU Sheps in your area would I find your prices for them on the low or the high side of the scale?
And regardless of how your prices compare to the market in your area why would you raise AU Sheps in the first place? Was it maybe because that breed might sell faster, better then say Beagle pups?
There's a lot of factors go into the free market system. Most of them are weighed on a small, local scale by people who are on the spot.
Can the guy make a buck?
A bureaucrat in a remote office can't make that decision for you. Not as well as you can.
I aint singleing you out Dave as much as I am agreeing with JD's post.
The fellow who raises puppys or Charolais or fixes tractors for a living is looking to maximize his net.
That's Capitalism. And it works darned good.
Too bad so many of the folks today look at making a profit as somehow wrong.

Looking at the posts there are a lot of 'elegant' comments.

Bob was talking about price elasticity, (where prices rise to a point they become inelastic).

I can also understand where Dave2 is coming from.

Having worked as a risk manager for a large company in New York in the energy commodity field.

A very successful broker who was executing our book, once told me 'there is nothing wrong in taking a profit, just don't be a pig about it'..

Got to agree with this post. Had my own engineering practice for most of 22 years now and I always tell other self-employed if they ask that profit is not a dirty word, just don"t let me know if I am being gouged.

Occasionally I get a project that we can really do well on. Might make $300 an hour or more, just because we might have done something similar in the past or maybe have a skill set that matches perfectly to the work. If the client feels that he received a fair value he will gladly pay it. Wish I had more work like that.

I tell my hay supplier basically the same thing, I don"t mind paying market price, but don"t abuse me since I am a current, convenient, etc. customer. He knows I can take my cash somewhere else as well.

Kirk

I keep wondering if it would be feasible to haul a load of hay down and bring back cattle. As skinny as some are you could get a lot in a cattle trailer. But you would have to hand load small squares in the trailer so that would be kind of labor intensive. Just thinking! In N MN there seems to be a surplus of hay.

I'm right in the middle of this hay/drought mess and it has been a tough year.

While your free market risk/reward explanation is accurate, perhaps dave2's frustration was more locally directed. I too watched with frustration as local farmers who already had really good milo crops
sell the residue hay at triple the normal cost. There was no doubling. It went from 30 bucks a bale to 90 almost overnight.

While it is true that it is the free market at work, it's a shame that one farmer would stick it to another just because they can.

Furthermore, I find it amusing that while these farmers talk about hay prices and free market, they line up at the FSA office for subsidy checks and cry to the government for protectionist policies to protect them from foreign competition.

If we are really going to believe in the free market then we need to eliminate all government subsidy programs.

(quoted from post at 21:35:36 12/11/11) I'm right in the middle of this hay/drought mess and it has been a tough year.

While your free market risk/reward explanation is accurate, perhaps dave2's frustration was more locally directed. I too watched with frustration as local farmers who already had really good milo crops
sell the residue hay at triple the normal cost. There was no doubling. It went from 30 bucks a bale to 90 almost overnight.

While it is true that it is the free market at work, it's a shame that one farmer would stick it to another just because they can.

Furthermore, I find it amusing that while these farmers talk about hay prices and free market, they line up at the FSA office for subsidy checks and cry to the government for protectionist policies to protect them from foreign competition.

If we are really going to believe in the free market then we need to eliminate all government subsidy programs.

Click to expand...

You's in the toilet now.right along with me... hope ya brought some beer......

I wonder how much money the evil people made when they caused the drought in Texas? They tell me that they can bet on the weather now, in the commodities markets. Last summer we had chemical trails almost every day here in Colorado. The whole sky would turn a light silvery color. What this does is cause a cooling effect by blocking some of the sunlight. They can now move the jet streams that bring in moisture from the oceans and move the storm clouds around by making low and high pressure areas. The strange thing is, that I haven't seen any chem trails now for over a month. Just the normal condensation trails that disappear in a short time. Have you seen any in your area?

Dave I was not talking about you being a socialist. What I was alluding to was the more socialist planning agriculture has in Germany. The rules on what and where the farms plant would drive me crazy. It makes local supply and demand less of a factor in what is being planted. Central control rarely ever works.

I realize that you guys are having a private argument here, but what say you in this situation?
Hurricane comes I buy all the generators I can find at $300.00 per. I go to the effected area and sell them at 1400 per. Am I a good capitolist or am I a gouger taking advantage of some other guys trouble?
Where is the line drawn between a fair profit and criminal greed?

JDseller
I've had several 18 wheeler loads of hay hauled to North Texas. Most hay haulers I've talked to wanted $3.50-$4.00 per loaded mile. I did get some hauled for $2.35 but it was a back haul and that's hard to find with all the hay being hauled to Texas.

On your comment about price per ton. I haven't found anyone selling grass hay that will sell it by the ton.They say the bales weight a 1000#s and when they get here they weight 800-850#s. I start talking to hay sellers about buying their hay by the ton and the phone goes DEAD.

It depends on two things: Which side of the equation you're on and the relationship between you and a higher power.

Good point.