Posted by JDseller on December 11, 2011 at 12:28:08 from (208.126.196.144):
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.
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