Commodities: Impacts on Farmers

Two factors place farmers on a treadmill: 1) commodity-based nature of agricultural products and 2) technological innovation. The only way a farmer in commodity production can differentiate themselves is by costs, leading to a large incentive to be a low-cost producer. Initially, technologies lead to lower costs. As more supply comes into existence, the price goes down. Consumers win in this process, but farmers may not.

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