Mink Farming Is Growing More Scarce

As reprinted in Moore, Robert L. and James D. Whitney. Microeconomic Principles in Action. Englewood Cliffs, NJ: Prentice Hal, 1990, pp. 19-20. This article discusses a variety of events that influence demand and supply in the domestic mink market. The article has been around awhile, but it provides an unusually straightforward and complete set of supply and demand examples. Passages from the article illustrate changes in tastes, income, price of substitutes, technology, input costs, and number of producers. Mink Farming Is Growing More Scarce as Costs Rise and Fur Demand Declines

By MICHAEL L. GECZI

NEW YORK--Mink farms could well be on the endangered-species list.

The animals themselves never have reached an endangered status, but the number of U.S. farms raising the small mammals for their pelts has decreased sharply in recent years.

[A] In the industry's peak year, 1966, about 6,000 mink farms were operating in the U.S. Today, there are 1,221 according to the U.S. Agriculture Department.

Despite slight increases the past two years, total pelt production last year was 3.1 million, or half of the record 6.2 million pelts produced in 1966. Annual sales at the auction level, where most pelts are sold, were about $54 million in 1974, according to one estimate, down from more than $120 million in the mid-1960s.

The smaller operations have been the hardest hit. "The mom and pop outfits and the part-timers were the ones that folded," says an Agriculture Department official. "The bigger farms have kept operating."

Some industry officials say a profitable mink farm of any size is rare. "We've been in dire straits for the past four or five years," says Robert Langenfeld, president of Associated Fur Farms Inc., New Holstein, Wis., one of the nation's largest mink farms.

[B] The industry's descent has been as rapid as its rise in the 1950s and 1960s, during which time mink grew in popularity as a fashionable status symbol. Growth was aided by the development of new colors (there are currently 13). As producers' feed and labor costs remained relatively stable in the face of strong demand, more people entered the industry.

Unsold Inventories

Growth proved to be too rapid, however; large unsold inventories from the record 1966 crop caused a price bust in 1967, and the situation has worsened since. [C] Feed and labor costs have climbed rapidly. [D] Competition from less-expensive foreign pelts has heightened.

Perhaps most important, mink has lost much of its prestige. Industry officials say the desire to wear a mink coat has in many instances given way to ecological concerns. Cries from conservationists "caused a mass reaction for the 'poor animal,'" says Louis Henry, president of Hudson Bay Fur Sales Inc., The Hudson's Bay Co. unit that handles about two-thirds of the pelts sold at auction in the U.S. annually.

Mr. Henry recalls that in 1966 pelts sold at auction for an average of $24 each. The going price today for a mutation (colored) skin is about $14. Dark furs bring a slightly higher price.

In the 1960s, a mink producer would net about $5 on a mutation pelt, says Mr. Langenfeld. [G] "Now," he says, "we're losing about $3 a pelt on our mutations.'' He says it costs the company $17 to raise a kit, or young mink, and bring its pelt to auction.

Mink farmers breed their animals in March. The kits--usually four to a litter--are born in early May. They're raised for six months before being killed--humanely, producers say--by gas or electrocution. The skins then are removed and readied for sale.

Finicky Animal

In most cases they are sent to one of four main U.S. auction centers, in New York City, Seattle, Minneapolis and Milwaukee. Fees received by one of the two associations that offer the pelts for sale and by the company conducting the auction can take up to 7.75°7o of the pelt's selling price.

The price the producers get for their pelts is their reward for raising a finicky animal that prefers only the freshest meat, poultry and fish. Most mink farms have expensive refrigeration, grinding and mixing machines, and also must hire extra help to thaw and feed daily rations to the animals. All this causes the mink's diet to represent more than half of the total cost of raising a mink to pelt-producing size.

[E] Mink researchers have been working to develop a dry diet that would be more economical and still satisfy the taste and nutritional requirements of the animal. Some farmers are using the dry diets, but they are far from gaining industry-wide acceptance.

U.S. producers are said to produce a high-quality pelt much prized by those who don't mind paying handsomely for a coat or stole. But about half of the six million or so pelts used annually in the U.S. are less expensive than foreign ones produced mainly in Scandinavia. Some industry officials say an increasing number of garments made from these pelts are being sold to people who formerly would have bought the more expensive item made from U.S.-produced pelts.

Mr. Henry says the worst may be over, however. "I think it (sales) will stabilize just about where it is," he says. [F] Some observers expect a pickup in business as the recession eases.

Will business ever return to the good old days? "I don't know any mink farmers who ever had any good old days," says Mr. Langenfeld.

QUESTIONS

1. Use supply and demand diagrams to illustrate the effects on equilibrium price and quantity in the domestic mink market that are implied by each of the passages labeled A to F. For passage E, depict the results of a successful research effort.

2. Taking passages C and D together, would the equilibrium quantity of domestic mink rise, fall, remain the same, or change in an uncertain direction? What about the equilibrium price of domestic mink?