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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Raymond Duray who wrote (33571)5/12/2003 9:09:46 AM
From: Joan Osland Graffius  Read Replies (1) of 74559
 
Raymond,

We have to differentiate between people that own land to grow their own food and those that expect to make a living with selling their farm products. In today’s world one can not make a living with a small plot of land. The technology has changed and is expensive therefore the farmer must have large land holding to obtain the maximum return on invested capital. The farmer in the US must have capital available to hold their product off the market if prices are low, which means they can not be forced to sell to make payments for the investment to put in their crops. There has been a cleansing process for the last 20 years or longer of US farmers that could not expand with free cash flow. This has been a brutal process.

It is very simple in reality. A business person can not sell a product at a loss and stay in business. There is a lesson to be learned in bear markets and that is debt will kill you.
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