A pig in a poke


Earlier this month, I met Jack Thompson, vice president, Carriage Trade Travel Services in Arlington, Va. During our talk, he compared the plight of travel agents with that of hog farmers.

He noted that farmers can get the government's ear now that drastically reduced prices they are paid for hogs do not translate into a similar reduction in the price of pork at the grocery store. On the other hand, he said, no one seems to care that airline commission cuts have not reduced air ticket prices.

Coincidentally, I had seen a connection between agents and farmers when I visited my cousin Ronnie in Iowa last month. There are significant differences, of course: My cousin owns his inventory, and he has to feed it -- and pigs eat a lot.

Unfettered markets tend to favor efficiency, which usually means bigness, but some blame government policies for fostering farm factories: Ten years ago, 7% of hogs came from the biggest farms; today the share is 37%.

This consolidation is a huge factor in today's mess: Big operations, unlike family farms, cannot easily switch products when the hog market is flooded, and many are delivering to slaughterhouses now under multiyear contracts that pay way more than today's market prices (hence the grocery store problem).

Ronnie gets $10 a hundredweight; farmers need $39 to break even. He said he figured it wouldn't be long before small farms are gone. That's when I connected the dots between hog farmers and travel agents.

I doubt any government agency aims to be rid of small farmers; that would be a sacrilege. I doubt airlines aim to be rid of small agencies even if they want, essentially, to buy fewer services from them. But consolidation is occurring as a direct result of commission cuts.

I am guessing some government types now, and some airlines eventually, may regret the consequences of their actions, not because the decisions themselves were inherently bad. The issue is that almost any major move has unintended consequences.

I have another point to make, and that relates to efficiency. I read that walking is good for our health because it is inefficient; that is, you have to use (hence, exercise) lots of body parts when walking, sometimes more thoroughly than when running. This lets me say what I believe: Efficiency (hence, cost-effectiveness) is not everything, not even in business.

If efficiency were our god, my cousin would slaughter all his piglets at birth (he hasn't the heart); we who have desk jobs wouldn't ever dare look away from the computer screen, and none of us -- after our inefficient childhoods -- could justify a walk.

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