Ive tried to explain this to you, but you clearly aren't interested in the reality.
What mechanism allowed these unprofitable farms to grow in order to purchase the smaller farms - where did the money to do this come from? Please consider that they are (without exception) unprofitable and have become proportionally less profitable as time has gone by.
You clearly have no understanding of the economics of dairy farming if you think the farmers - large or small - are setting their price, or if their profitability is in some way dictated by how they operate on an agricultural level. Its subsidies, plain and simple.
I don't understand your agenda in trying to make this out to be something else. I get that this is an entrepreneurship forum, but this is the exact kind of example we should recognise as destructive - not framing it as good business in any way.
EDIT: I should clarify, I'm not suggesting that the owners of large dairy farms are evil. It is the system that is forcing this upon them too. If they didn't do it, they too would go bankrupt. If thats the ideal of "go big or go home", well, there can be only one...
No matt, you have not explained it at all from an economics perspective - in fact, your own stated facts don't support the notion that bigger farms have some kind of leverage from the subsidies over smaller farms.
A 'unit subsidy' doesn't at all help larger entities more than smaller ones - there must be some other dynamic at play.
A unit subsidy should be the economic equivalent of broadly elevated demand.
Either 1) larger farms simply do have some economies of scale, thus flushing out smaller ones - in which case subsidies are not super relevant and this would be happening anyhow or 2) there's some kind of direct advantage the larger producers have in yielding a per-unit subsidy, I can't imagine what that would be, but you seem to have a lot of expertise so perhaps you can elucidate.
I replied to you regarding this in another thread.
In short, its #2. It's to do with volume. By producing a large volume of an unprofitable product you would usually lose more money than someone producing a small volume of an unprofitable product. However, because of the subsidies, this has been reversed, and you now make more money than someone creating a smaller volume. This is exactly how these large farms have been established (they were incorporated to take advantage of these very subsidies), and they have used the large "profits" to further grow. The margins have further reduced, but they are still "profitable" because of the volume.
What mechanism allowed these unprofitable farms to grow in order to purchase the smaller farms - where did the money to do this come from? Please consider that they are (without exception) unprofitable and have become proportionally less profitable as time has gone by.
You clearly have no understanding of the economics of dairy farming if you think the farmers - large or small - are setting their price, or if their profitability is in some way dictated by how they operate on an agricultural level. Its subsidies, plain and simple.
I don't understand your agenda in trying to make this out to be something else. I get that this is an entrepreneurship forum, but this is the exact kind of example we should recognise as destructive - not framing it as good business in any way.
EDIT: I should clarify, I'm not suggesting that the owners of large dairy farms are evil. It is the system that is forcing this upon them too. If they didn't do it, they too would go bankrupt. If thats the ideal of "go big or go home", well, there can be only one...