What is often frustrating to all students, not just those in agriculture, is many disciplines start out and describe “pure” systems or concepts. After students have mastered these ideas, they are then told that the “real” world isn’t actually like what was just learned. In reality, the world is a complicated, messy place. However, these “ideal” concepts are still useful, provided you understand how reality alters the “ideal.”
Students in Agriculture Economics, all economics really, learn the concept of “perfect” competition. In a nutshell, perfect completion is defined as “An industry that has four characteristics: (1) numerous buyers and sellers, (2) homogeneous product, (3) freedom of entry and exit, and (4) perfect information.” While existing in the real world, most farmers and ranchers producing food, fiber and fuel fall in this general category. For this column the key concept in agricultural production is that no one firm or individual can influence the price of their output because of the four characteristics listed in the definition. They can sell at the offered price or not. Anyone having followed the commodity markets for any period time and relating output price to the costs of production quickly sees this is true. Most of us would assume producers in this environment would do whatever they could to get an edge, including withholding information helpful in production. Actually, the exact opposite is true (see 4 in the definition of perfect competition).
It may not seem logical that you would share information under prefect competition. However, there is no advantage under this system in withholding information. Whether or not a producer obtains and uses the information properly is their choice but they have access to it. So why is this concept important for production agriculture and what is the outcome of perfect completion?
The news is constantly mentioning cases of industrial espionage, stolen information, patent infringement and so on. On the production side of agriculture, the news involves producers working together on issues, fighting against threats to their industry, dropping everything during busy times of year to help a fellow producer, and meeting as a group or groups to share information to help their fellow competitors be successful and stay in business. No one is required to participate, but they’re crazy if they don’t. One of the most obvious examples of access to information is the Cooperative Extension Service through land grant institutions like K-State. The Extension Service spends its time obtaining and sharing information with producers through publications, meetings and field days.
At Barton, the agriculture program has an advisory board in part made up of producers and industry that often “compete” with each other but come together for the common good of their industry. There are numerous producer groups from No-Till on the Plains to the various commodity groups and advocacy groups like Farm Bureau. Last weekend in Wichita, the Kansas Farm Bureau held its annual YF&R meeting to help the next generation of farmers and ranchers learn and prepare to lead the industry. These cooperative efforts help define an industry that understands the importance of educated, informed members to the survival of their industry.
Dr. Victor L. Martin is the agriculture instructor/coordinator for Barton Community College. He can be reached at 620-792-9207, ext. 207.