Q1 Food - An inside Story
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by Scorpion Stinger
Yet another article on Q1 food?
Well I've been watching the pollies go hammer and tong on the subject and thought, for the record, I was compelled to add my view to the mix. (I disclose that I am part owner and manager of Fairgo Foodco)
Firstly from a market watch point of view, the recent shortage was a result of the previous oversupply of food, leading to many companies ceasing to operate or moving up the Q chain, crashing in to the reality that wargames means there's much less reason to have higher Q food.
So it was a once of, structural change in demand like BHP and Rio enjoyed the last few years with ore for China.
Second, the same change spells disaster for the grain industry, which is suddenly in huge oversupply coz citizens don't need High Q food so are consuming less units of grain each day. Most grain is already being sold below cost so that market is in for some companies going under.
Third is the costs involved over the last few weeks. Even with grain at low 40 cents per unit, the wage levels if you go with providing jobs for low level employees bring the total cost of food to around 1.10 AUD. Hopefully when grain prices inevitably increase, productivity will push my wage costs down so that I can keep around that net cost, but there is/was a labour shortage that dictates costs.
Add to that the donating of the occasional moving tickets, food and some gifting to help new players to get involved with wargames and you start to see the "super greedy profits" disappeared without a trace.
Lastly is the latest supply demand picture. As a market should do, higher profits have attracted a lot of new entrants into Q1 food, prices have crashed and will now continue to drop until some companies disappear under the coming losses or until our population moves up to a level to make Q1 food demand meet supply.
All this happenned naturally, without any need for intervention by government....
Scorpion
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Comments
Good article, sheds some light on what is happening. A beginner in politics thanks you 🙂
good article. Maybe if Grain companies have over supply of grain they should look to invest it in another country,1 with low grain.
Good article.
@ Broad, good point. For 20G an Export License might be a good investment for a grain or Q1 Food Company.
My BIGGEST concern with the government getting involved in the economy is that normal up ticks and down ticks tend to get magnified. Now we have a lot of Q1 Food on the market and I am sure the prices will come crashing down as soon as the profits that were made begin to deteriorate.
Not only do we have a lot of Q1 Food on the market, but we also have many new companies. Some got into the business to sell cheap food and possibly operate near break even or at a loss, and other got in because the found a short term opportunity.
Let the Free Market work on it's own. It will always correct itself on it's own. 🙂
John (Icey1174)