Wednesday, August 19, 2015

EU Cartels in the Food Chain?

Politico has a piece on the problems which European sanction on Russia are causing for the farmers, particularly French farmers.  (Does anyone here remember the problems Pres. Carter had imposing a grain embargo on the Soviet Union after the invasion of Afghanistan--that and the boycott of the Olympics were the major sanctions we imposed, IIRC?)

It includes this paragraph:
While French industrial purchasers normally agree to absorb a set volume of local production at controlled prices agreed during roundtables, this time some of them balked over the huge difference between the cost of French meat and products from Germany or Spain — around 30 euro cents per kilo.
Some complained that buying French meat at inflated prices would put them at a serious economic disadvantage. The refusal of just two moderately sized groups, Bigard and Cooperl, to buy a certain volume of pork at an agreed price of €1.40 per kilo was enough to upset the tightly-controlled system, shutting down the Brittany pork product exchange for eight days. 
I wonder what "roundtables" means--do the French equivalents of McDonalds, Burger King, KFC, etc. meet together to set volumes and prices of meat they'll buy?  It's what it sounds like.

I sort of assume that the contract growing of livestock in the US extends all the way up.  Jane Doe signs a contract to grow chickens for Tyson, Tyson signs a contract to deliver chicken breasts to KFC.  But how are the prices set--subtle signalling between KFC and McDonalds (like the airlines do)?  When I'm reincarnated I'm going to study economics.

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