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If you’re a price-taker you need economies of scale

  • By Alan Knott-Craig
  • May 11, 2017

Most farmers have no control over the price of the goods they sell.

Milk, maize, apples, whatever. The price is set by someone else.

The farmer is a price-taker. He has no say over the most important part of his business: Revenue.

If the market wants to pay less than what it cost the farmer to produce an apple, he has no option but to take the price.

The only way for a price-taker to stay ahead of the game is to have the lowest cost operating model.

That’s why the only successful farmers are the big ones. They’re the only operators who can sufficiently invest in technology and land to reduce the cost of production.

 

For a price-taker it’s all about economies of scale.

If you’re not growing, you’ll fail.