08-06-2012, 05:30 PM
(08-06-2012, 03:12 AM)Underdogger Wrote: [ -> ]...If the potato purchase price is fixed based on existing opportunity cost of growing another crop other than potato, the company does not seem to be in a position of bargaining power.That is the business risk, which devastated 2012 results. Should it happen again, the company would be out of business sooner rather than later. One has to live with it, and at least I was stunned by the magnitude of profitability drop last winter. When buying my shares earlier, I was mentally prepared for certain possibility of being screwed by either Chinese government or largest shareholders. Business risk of this magnitude was an extremely distant outlier possibility - but here we are... Still owning the shares, though.
Quote:...ie at the mercy of government to provide minimum income to the farmers ... Is the company merely a tool for the govt to achieve its social objectives at the expenses of investors ?I think this asymmetry applies to all Chinese agriculture stocks. And natural resources. And banks. You just have to calculate decent price discount for that. It can't be zero and it can't be 100%. The truth lies somewhere in between.