I don't see the problem for the producer. Could you explain it?
Easily. Under deflation it is less profitable and more risky to produce goods. A producer buys raw materials and makes his merchandise today (when prices are higher) but sells tomorrow when prices are lower, so there is no incentive to expand production or may be even keep it at the same level. In detail it is explained in any decent economic textbook
This is not true, imo.
If I need something there will be always someone producing it. If the producer is worried about deflation (if any, that is to see) he/she will simply increase the price for the work ("transformation of raw material") he/she is making.
This process pushes prices up and counterbalances deflation leading in the end to stable prizes (everything else being constant).
Best regards,
ilpirata79