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From:
Lloyd Spear <[log in to unmask]>
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Date:
Fri, 21 Dec 2007 11:22:26 -0500
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Discussions about how to differentiate one's honey in order to enjoy higher
prices, and the sad state of affairs when unable to do so, always remind me
of an article in Harvard Business Review( 'HBR') about 20 years ago.

The authors of the HBR article made a study of commodity pricing over the
past 200 years and covered commodities such as copper, gold, tea, coffee,
sugar, wheat, oil, etc.   Their thesis was that various price-controlling
schemes (think OPEC) often worked well in the short term but invariably
failed in the long term.  Further, they maintained, the long term prices of
all commodities were determined by the lowest cost producer, who invariably
set prices at just above cost.  Any technological advantages held by higher
cost producers were of nil benefit to UNLESS IT RESULTED IN THEM BEING THE
LOWER COST PRODUCER.

An example demonstrating the effect of this thesis is what has happened
to diamond prices, where for years a cartel set prices artificially high,
and the cartel fell apart when ample supplies of diamonds were discovered in
Russia and Australia.  Presumably, the authors would argue that in the long
term OPEC's efforts to maintain artificially high prices will fail.  While
there has been some signs of such pending failure, political considerations
(not supply and demand for oil) have kept OPEC alive and well.

For honey, I believe that operations such as Adee's are doomed to forever
sell at the prices set by the lowest cost producer; currently China.
However, some beekeepers, such as Mike Rowbottom, take steps to effective
remove their products from the commodity labeled as 'honey' and sell it as
another product...such as, 'Honey from HARROWGATE'.  Obviously (to those of
us in the US) 'Honey from North Dakota', just does not do the same job, so
the Adee's and those of a similar ilk are in a tough position.

Equally obvious, the National Honey Board's initiative to remove honey from
a commodity status by labeling it by floral source was of little interest to
the Adee's of the world and was thus doomed to failure.  (Since the very
existence of the NHB was dependent on votes based on the *pounds*, and not
the value, of honey.)

But there is no rule saying that high cost commodity producers cannot
whine...

Enjoy your holidays!

Lloyd

-- 
Lloyd Spear
Owner Ross Rounds, Inc.
Manufacture of equipment for round comb honey sections,
Sundance Pollen Traps, and producer of Sundance custom labels.
Contact your dealer or www.RossRounds.com <http://www.rossrounds.com/>

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