I got to spend some time with relatives in East Texas this holiday season, where the accents are as thick as the sweet tea. After days of presents, gluttony, and fireworks, my family and I packed our car and headed home. As we were passing a truck stacked high with bales of hay my mother commented on the escalation of feed prices in Texas. Apparently, due to ongoing drought in the region, the price of feed has significantly increased in recent months. My 13-year-old sister remarked, “So ranchers have to pay double to feed their cows just because there’s a drought? That’s not fair.”
I set up a scenario for my sister, “Let’s pretend you’re a rancher and you see that the government has lowered feed prices in the middle of a drought. You don’t really know when this drought is going to end, so how much feed are you going to buy while it’s capped at regular prices?”
“A lot,” she responded, “maybe all of it.”
We then talked about what would happen to the ranchers in line behind her who wouldn’t get a chance to buy enough feed because she bought so much. What if someone in front of her bought up all of the feed, leaving none for her to purchase for her animals? She decided that wasn’t fair either. Paying higher prices may be tough, but at least ranchers could feed their livestock instead of watching bales and bales of hay be dragged away by the ranchers who showed up first.
One of the chief allegations against the free market is exploitation of the consumer – such as “greedy” farmers jacking up the price of feed during a drought. But in truth, simply allowing supply and demand to dictate price fosters just distribution of the product. No government assistance required.Published in