It works for large scale operations, because they can use milk as a loss leader. That means they can squeeze producers for the lowest price possible, rendering margins so thin that you basically have to be a hyperoptimized producer to even be able to compete.
It's an example of large businesses creating value deserts, and unfortunately, the political/economic climate hasn't been terribly up to the task of doing anything to slow or stop it.
A value desert is the situation created where an actor corners and optimizes so much of an industry such that meaningful competition in that vertical becomes dead from the start. This puts the actor in an advantageous position since there is no rational reason to disrupt that vertical, which makes it easier to coast along as a major player.
Google/Alphabet has been used as an example of the phenomenon with regards to the digital advertising market. Wish I could find the citation, but I think I first heard of it from an NPR spot.
https://www.dairyherd.com/article/dozens-more-farmers-lose-m...
https://www.nbcnews.com/news/amp/ncna887941
It works for large scale operations, because they can use milk as a loss leader. That means they can squeeze producers for the lowest price possible, rendering margins so thin that you basically have to be a hyperoptimized producer to even be able to compete.
It's an example of large businesses creating value deserts, and unfortunately, the political/economic climate hasn't been terribly up to the task of doing anything to slow or stop it.
A value desert is the situation created where an actor corners and optimizes so much of an industry such that meaningful competition in that vertical becomes dead from the start. This puts the actor in an advantageous position since there is no rational reason to disrupt that vertical, which makes it easier to coast along as a major player.
Google/Alphabet has been used as an example of the phenomenon with regards to the digital advertising market. Wish I could find the citation, but I think I first heard of it from an NPR spot.