Below is an excerpt from Marin Bozic’s blog. Bozic is an assistant professor of agricultural economics at the University of Minnesota. Learn more at: http://www.marinbozic.info/
How do I reconcile the great optimism about dairy exports that I have with the apparently pessimistic results of my analysis on the impact of exports on long-run profits?
Did you hear about Kairos? According to Greek mythology, Zeus (the bigshot among Gods) had a son called Kairos. He symbolized opportunity and was always on the run. He had a single long lock of hair falling over his forehead, but he was bald in the back. Thus, you can easily catch him as he is approaching, but once he has run past you, the opportunity has gone.
The same is true about dairy exports. In the short and medium run, they will boost prices and represent a tremendous chance to grow the business and increase volume.
However, in the long run, once dairy herds have had enough time to expand to meet the new demand, profit margins will return to their normal level, and unless input costs stay higher, milk price will be what it would be without exports. Kairos’ hair lock is really long, when it comes to dairy exports. But you have to act; you have to seek and grab it. He is still bald in the back. PD
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