Tom Harkin: “Farmers are price takers. In other words, a farmer has a lot of fixed costs over which that farmer has no control--land…”

“Farmers are price takers. In other words, a farmer has a lot of fixed costs over which that farmer has no control--land, seed, fertilizer, chemicals. The farmer who goes down to get his seed can't say, well, my prices went down last year. I will buy that, but I can give you 10 percent less. The farmer has zero bargaining power. He pays the freight. Whatever it is, that is what he has to pay. So the only way for that farmer to make anything is through the price that the farmer receives, price plus his production. Now, if the price is so low, no matter what he produces, he can't produce himself out of the hole. That is another little anomaly that I have thought about in all my years here and working in agriculture on the agriculture committees. People say, well, if prices drop--see if this doesn't ring true with my friend from South Dakota. A lot of ideologues say, well, if prices drop, farmers will take that signal and they will plant less. But we know what happens when a farmer has a fixed unit of land and he has his fixed machinery and prices drop. They say, how can I get more production out of that unit of land to cover the lower prices? And so what happens is you get a drop in the prices.”