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Idaho farmers. Since 1980, the tonnage of potatoes grown in Idaho has almost doubled, while the average yield per acre has risen by nearly
30 percent. But the extraordinary profits being made from the sale of french fries have barely trickled down to the farmers. Paul Patterson, an
extension professor of agricultural economics at the University of Idaho, describes the current market for potatoes as an “oligopsony” — a
market in which a small number of buyers exert power over a large number of sellers. The giant processing companies do their best to drive
down the prices offered to potato farmers. The increased productivity of Idaho farmers has lowered prices even further, shifting more of the
profits to the processors and the fast food chains. Out of every $1.50 spent on a large order of fries at a fast food restaurant, perhaps 2 cents
goes to the farmer who grew the potatoes.
Idaho’s potato farmers now face enormous pressure to get bigger — or get out of the business. Adding more acreage increases total
revenues and allows more capital investment; but the risks get bigger, too....
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This note was uploaded on 02/25/2014 for the course MGMT 120 taught by Professor Litt during the Spring '08 term at UCLA.
- Spring '08