YOUR MONEY

When is monopoly a good?

 The Report on Business section of the Globe and Mail, July 31, 2013,is dominated by articles on the split in the cartel that control’s the global potash industry.

Two companies, one Canadian, the Canpotex group, and the other Russian have cornered 68% of the world’s market and ‘determined’ prices to customers and countries around the world as they saw fit. The Russian co-venture partners: Urakalin and Belaruskali have split and promise to compete for market share.  (G&M, pB1)

This should be a GOOD NEWS story for two reasons:

1. Monopoly and cartels are the bane of free capitalism and have been considered the great enemy since Theodore Roosevelt’s presidency and his cartel busting legislation that ended the era of the so-called “robber barons”.

Having two or even three companies collude and set world potash prices should be unacceptable and illegal at 68% of market share.  OPEC by comparison is tolerated because it only controls some 40% of world sales. So were have governments and the World Trade authority been on this file?

2. Potash prices are expected to drop world-wide: benefiting millions if not billions of people as farmers and nation states who import this crucial fertilizer will be able to feed their populations and increase world food supplies at lower costs!

 

But the G&M sees this change as a singular disaster because the Canadian cartel member is just that, Canadian, and its stock price will plummet!

Too bad the G&M cares so little for the farmers of Canada who barely make ends meet with inflated oil and potash prices, or the end consumer – you and me – who buy food that goes up or down with the price of potash and oil.

But this should not be surprising. 

G&M’s Report on Business section, like most market media reporting, is a stock market mouthpiece promoting buy, buy, buy and shilling for broker commissions and fee; and does not look beyond tomorrow’s stock price.

Yes, potash company profits which have been soaring will drop and supply-demand forces will dictate prices again – as they are supposed to in Economic 101.

It is a GOOD NEWS STORY for capitalism, ordinary consumers the world over and the future, but the G&M’s reporters and analysts do not see this. Their crystal balls are too clouded and distorted by short term greed.

And Warren Buffett, in America’s agricultural heartland, will be smiling and continue to plan for the long term benefit of his shareholders and all the people of America.