May 27, 2020
Paying Twice For Your Chicken
Honestly, this is not anything new, and similar is done in many countries around the world - the government pays farmers to burn crops or to destroy eggs or chicks or to leave the land fallow (why not do this for shmitta?)... but it is still upsetting when you see it in action, when you see the government approval rather than just "knowing" subconsciously that it is happening.
The Chicken Coop Council, based on approval from the Minister of Agriculture and the Minister of Economics with subsidies, is paying its member farmers to not raise additional chickens, in order to prevent the price of chickens from dropping for the consumer.
Additionally, the Minister of Agriculture has decided, at least for now, to keep the egg quotas exactly the same as last year - no additional eggs allowed. Remember the egg shortage around Pesach time this past year? Despite the growing population, the local egg growers are only allowed to grow the same amount as last year, ensuring that at some point we will suffer another shortage - unless other ministers open up the market for imports. That is besides for keeping the price of eggs from dropping, and probably actually causing them to increase.
So, at least with the chickens (I dont think the egg people are getting paid extra for not growing more eggs), we get to pay twice. First we are paying taxes that are being given to the chicken farmers to not raise chickens, and then we are paying artificially high prices for chicken in the supermarket and at the butcher because of all the chickens that are not being sold.
The Chicken Coop Council, based on approval from the Minister of Agriculture and the Minister of Economics with subsidies, is paying its member farmers to not raise additional chickens, in order to prevent the price of chickens from dropping for the consumer.
Additionally, the Minister of Agriculture has decided, at least for now, to keep the egg quotas exactly the same as last year - no additional eggs allowed. Remember the egg shortage around Pesach time this past year? Despite the growing population, the local egg growers are only allowed to grow the same amount as last year, ensuring that at some point we will suffer another shortage - unless other ministers open up the market for imports. That is besides for keeping the price of eggs from dropping, and probably actually causing them to increase.
So, at least with the chickens (I dont think the egg people are getting paid extra for not growing more eggs), we get to pay twice. First we are paying taxes that are being given to the chicken farmers to not raise chickens, and then we are paying artificially high prices for chicken in the supermarket and at the butcher because of all the chickens that are not being sold.
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That does sounds upsetting. but is it possible that it's for our own good? Meaning, if they let too much production, prices will fall, but then it will be less worth it for the farmers to stay in the business. that could have a long-term affect on the industry and end up causing an even greater shortage. I don't know that this is the case, I just hope there is some type of positive justification for what they are doing
ReplyDeletegood question. a free market believes that the market will police itself and come to the fair price that suppliers will supply at and buyers will buy at. If there is too much supply making it too cheap and not worth the growers growing, they'll slow production on their own and the prices will rise. If they increase to the point the buyers wont buy, they'll increase production to bring the prices down. Pretty quickly they will find the equilibrium where sellers can make their money and keep producing and buyers will be happy to buy. I am not sure this needs to be done by external controls and interests. Maybe an economist out there can weigh in and explain it better one way or another.
DeleteIndeed, a common subject in Economics 101 and only restricted to socialist countries.
ReplyDeleteGiven that, I know a couple of people in the local poultry industry, and their prices are quite static year round and they do not see any of the extra NIS that gets added to the prices, often around holiday time.