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California farmers to destroy 420k peach trees following Del Monte bankruptcy

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Re: California farmers to destroy 420k peach trees following Del Monte bankruptcy

#361

Post by lacunary »

UncleOxidant wrote: post #359
Aurornis wrote: post #57

Earlier quoted context omitted.

A situation like this bring out many comments that reveal a very low understanding of basic economics (and a low rate of reading the article). Del Monte went out of business because there wasn't enough demand for the peaches. The company that purchased their assets is continuing to buy 24,000 tons of peaches, but the previous unsustainable business was buying a lot more. It's the excess fields that need to be repurpo…

> Del Monte went out of business because there wasn't enough demand for the peaches How did this happen? It takes a long time before a peach tree seedling gets to the point where it can bear a significant amount of fruit. I'm going to guess about 10 years. Given that kind of delay, how did they get into a situation where there was this much over-production?

delays between increasing capacity to produce and bringing production to market naturally lead to cycles of over and under production. https://thesystemsthinker.com/balancing-loops-with-delays/

Re: California farmers to destroy 420k peach trees following Del Monte bankruptcy

#362

Post by p1necone »

Aurornis wrote: post #288
gblargg wrote: post #110

Earlier quoted context omitted.

> if we had forced the peaches to be grown and canned (as many comments are suggesting) then that would be a different kind of waste as they'd sit in warehouses while the land, resources, and labor were used to produce something people weren't buying instead of being used to produce foods they were buying. Worse, the price would have to be lowered to bring up sales, which could put the other peach farmers into bankru…

If you try to force production and sale hard enough, the sale price can even go negative. If your warehouse is full of peaches nobody wants, you might be forced to sell them for negative dollars to take them away. It's either that, or you pay to have the waste management company dispose of them. So the price effectively goes negative from trying too hard to force something to happen.

If you turn all them peaches into high proof alcohol they take up significantly less space...

Re: California farmers to destroy 420k peach trees following Del Monte bankruptcy

#363

Post by t-3 »

throw0101c wrote: post #137
pc86 wrote: post #83

Earlier quoted context omitted.

What makes you think the government is remotely qualified to run a canning operation, a logistics operation, a warehousing operation, an HR operation, and a finance operation for peaches? Also which government? Because there are at least 3-5 relevant ones here, maybe more.

> What makes you think the government is remotely qualified to run a canning operation, a logistics operation, a warehousing operation, an HR operation, and a finance operation for peaches? The DoD (for one) runs lots of logistics, warehousing, HR (2.8M), and finance stuff.

Have you ever looked at the prices they pay? Government is the last place I'd look for competent management, anyone good/noncorrupt would be making 10x in the private sector.

Re: California farmers to destroy 420k peach trees following Del Monte bankruptcy

#364

Post by graeme »

musicale wrote: post #358
Aurornis wrote: post #57

Earlier quoted context omitted.

A situation like this bring out many comments that reveal a very low understanding of basic economics (and a low rate of reading the article). Del Monte went out of business because there wasn't enough demand for the peaches. The company that purchased their assets is continuing to buy 24,000 tons of peaches, but the previous unsustainable business was buying a lot more. It's the excess fields that need to be repurpo…

> Del Monte went out of business because there wasn't enough demand for the peaches They appear to have gone out of business because of massive debt from a leveraged buyout, combined with other issues. https://www.linkedin.com/pulse/when-private-equity-overcooke...

That doesn't change the fact that there isn't enough demand for canned peaches. If there were enough demand for peaches the farmers would sell the peaches, rather than destroy the peach trees.

Re: California farmers to destroy 420k peach trees following Del Monte bankruptcy

#365

Post by SauntSolaire »

nradov wrote: post #236
munk-a wrote: post #203

Earlier quoted context omitted.

My opinion is that it's mainly unjust to have invested so much in growing it to destroy it. Mistakes happen and this is the right decision for now given the situation but it is wasteful.

Well then the solution is simple: people need to stop making mistakes. We should all have perfect foresight, and never guess wrong about counterparty risk or changes in consumer tastes.

Agreed. And the single best way to avoid making mistakes is to stay at home and complain on the internet about everyone else's.

Re: California farmers to destroy 420k peach trees following Del Monte bankruptcy

#366

Post by AnthonyMouse »

Aurornis wrote: post #57
clarionbell wrote: post #20

People underestimate how difficult it is to seek buyers for the amount of produce we are talking about here. Farmers are specialists at growing things, not at moving them across great distances, marketing them to dozens small buyers and or starting up packing plants from scratch. They don't have enough trucks, people or packaging machines to move them around. Maybe, they can take some portion for local use. But the r…

A situation like this bring out many comments that reveal a very low understanding of basic economics (and a low rate of reading the article). Del Monte went out of business because there wasn't enough demand for the peaches. The company that purchased their assets is continuing to buy 24,000 tons of peaches, but the previous unsustainable business was buying a lot more. It's the excess fields that need to be repurpo…

> Del Monte went out of business because there wasn't enough demand for the peaches.

Things are often more complicated than that. Del Monte was founded a long time ago and fruit trees take a long time to grow. As a result, as the originator of those trees, you're at a disadvantage because you have to pay for many years of maintenance and interest on capital before the trees bear fruit, and are then sitting on a load of debt from the unproductive years that you can't service if the market price is low after the trees are producing.

But bankruptcy (or new ownership) clears the old debt, and then you're left with a productive asset that might not have been worth the cost to create at current prices, but could easily be worth the cost to continue using now that growing the trees is a sunk cost, which requires a much lower market price to be sustainable.

> In the article you can even see that the farm lobby was so powerful that they got the USDA to pay for the tree removal.

That sounds a lot like a cartel acting through regulatory capture to limit supply.

Like if destroying the trees to grow something else was more profitable than continuing to sell the produce then why does it require a government subsidy?

Re: California farmers to destroy 420k peach trees following Del Monte bankruptcy

#367

Post by t-3 »

lifis wrote: post #131
BloondAndDoom wrote: post #100

If you are in agriculture you understand how expensive to move things, as crazy as this sounds it’s practically only option many times. Easy way to understand, they can announce it’s free come and get it and it wouldn’t have moved. Which clearly shows financially moving these don’t make sense.

Why? From searches and LLMs it seems it costs $50-100 to move a tonne 1000 km via truck, giving 0.05-0.10 $/kg for a supermarket 500km away. Fruit prices at at least $4.5/kg for peaches, 3.75$/kg for apples 1.45$/kg. So transport cost seems negligible and if fruit is given away for free, it seems it would be very profitable for any supermarket in region to show up with a truck. What's missing in this analysis?

Sorting, selling, cleaning, the variety may not be palatable or presentable fresh, transport and packing damage, warehousing and storage (grocery stores don't have huge piles of fruit or even dry goods in the back, this stuff is all JIT)... probably missed a few, but that's just of the top of my head.

Re: California farmers to destroy 420k peach trees following Del Monte bankruptcy

#368

Post by t-3 »

chrneu wrote: post #345
pfdietz wrote: post #283

As I understand it, Del Monte made a few mistakes. The first was related to COVID. Sales of canned goods spiked during COVID. They misinterpreted this as a permanent change and invested accordingly. Second, they did not find a way to compete with store brands, which are no longer at a quality deficit vs. more expensive name brands like Del Monte. Finally, they didn't address changes in diet that (as I see it) makes s…

Correction: Carbs are not "unhealthy". That's a wildly inaccurate and broad thing to say. Excess consumption of processed and/or "unhealthy" carbs is unhealthy. Excess consumption of protein is also unhealthy. Same with fiber. I'm not commenting on anything else, just the fact that "carbs are recognized now as seriously unhealthy" is absolutely untrue.

> Same with fiber.

Really? The only issues arising from fiber that I've heard of is constipation, and that's only if diet suddenly changes and large amounts of fiber are introduced to a digestive system unused to it. AFAIK most people don't even get a tenth of what they should in terms of fiber.

Re: California farmers to destroy 420k peach trees following Del Monte bankruptcy

#369

Post by MassPikeMike »

p1necone wrote: post #362
Aurornis wrote: post #288

Earlier quoted context omitted.

If you try to force production and sale hard enough, the sale price can even go negative. If your warehouse is full of peaches nobody wants, you might be forced to sell them for negative dollars to take them away. It's either that, or you pay to have the waste management company dispose of them. So the price effectively goes negative from trying too hard to force something to happen.

If you turn all them peaches into high proof alcohol they take up significantly less space...

Similarly, in 1790s America, farmers west of the Appalachians were growing plenty of corn, but because of bad roads the only feasible way to transport it to the much larger markets east of the mountains was as whiskey. When Alexander Hamilton imposed a tax on distilled spirits, the result was a "Whiskey Rebellion" in which George Washington himself rode out at the head of an army against other American citizens.

Re: California farmers to destroy 420k peach trees following Del Monte bankruptcy

#370

Post by rf15 »

kelnos wrote: post #229
rf15 wrote: post #107

Earlier quoted context omitted.

> A situation like this bring out many comments that reveal a very low understanding of basic economics (and a low rate of reading the article). And a very low understanding of basic biology. A bunch of rotten fruit is _exceptionally valuable_ in many parts of the world. There's a million things you can do with it, alcohol, fertilizer... edit: me right now I'm in a position where I could really use truckloads of rott…

> A bunch of rotten fruit is _exceptionally valuable_ > right now I'm in a position where I could really use truckloads of rotten, inedible peaches if I could get them for free. These two statements contradict each other. If you are pushing to get something for free (and seems like you wouldn't pay for them, or wouldn't pay much for them, instead opting to do without), then they are absolutely not exceptionally valua…

I would pay for it - I meant this in the context that people here are getting paid to destroy value. Also don't get the downvotes, improving soil efficiently in large quantities is an interesting question a lot of tech people (being city people) never have to care about.
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