Four Myths of Supply and Demand

Simple arithmetic says Grower A made a profit of $3.50, right? But let’s suppose the market price on that given day was $12.00—and if you ask Grower A...

By Bruce Peterson
August 10, 2016
1 minute read
Four Myths of Supply and Demand

Simple arithmetic says Grower A made a profit of $3.50, right? But let’s suppose the market price on that given day was $12.00—and if you ask Grower A about that day’s sales, the response will be a LOSS of $2.00 per product. How’s that again?

But why is any of this important? The supply and demand nature of the produce industry has molded its very culture, steering participants on a certain path. Not only has it influenced the relationship between buyers and sellers, but it has influenced how budgets are determined, how individuals are rewarded, and how organizations are perceived.

In all fairness, at one time the influence of the market made a little more sense. Most transactions were much smaller. In fact, if you could buy a “straight load” you were a big player. Today, this same mentality now applies to hundreds of truckloads as part of a given purchase. So while supply and demand will always have an impact on the fresh produce industry, the cultural impact needs to evolve to reflect today’s various buying scenarios.

 

Bruce Peterson is the founder and president of Peterson Insights, Inc., a consulting company specializing in the complex challenges of the fresh food industry. Peterson began his career bagging groceries, and went on to work for several supermarket chains, including 17 years at Walmart Stores, Inc. He has owned and operated a wholesale produce company, and served as chief executive officer of both Naturipe Foods LLC and Bland Farms.

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