Comment by AnthonyMouse
8 hours ago
> 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?
> 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?
Because why pay for something when you can get someone else to pay for it?
"The industry has captured the government and is doing a corruption" is the thing consistent with the theory. The non-corruption/capture reason for the government to pay for it is supposed to be what?