The Complexities of Supply

By Randy Hooper

Prices for fruits and vegetables aren’t set until they reach retailers. Uncertainty can be a farmer’s worst enemy.

It’s good that more people are asking where their food comes from. We want to feel connected to our food, right back to the hands that grew it—whether the farmer lives down the road, or on the other side of the world. But very few consumers understand how their food, especially fruits and vegetables, come to be sold in the marketplace.

The producer’s perspective

While we might think prices affect us as consumers, they don’t affect us nearly as much as they do farmers. Take Rosa, for example. Rosa and the people in her village grow mangos near Motupe, in northern Peru. They work all year building drainage to get the most from their irrigation water. They compost and mulch, and they plant flowering plants to attract pollinating bees. But Rosa is in her 50s. She and the rest of her community can’t do all the work on their own. Instead, many people are involved in delivering fruit from her orchard to a local store, say, in Saskatoon.

The produce industry is really about transportation and logistics. The global distribution of fruits and vegetables represents an unimaginable ballet of trucks, aircraft, and container ships that delivers the means to create those beautiful produce displays in our local stores. In fact, the combined costs of trucking, customs, inspections, and sea-container transport can account for more money than the fruits or vegetables themselves. Grading, packing, boxing, and placing those annoying stickers can also account for 20 to 30 percent of the product’s value.

Delivering the goods

The long process of delivery starts with a local trader who brings a harvest crew to take Rosa’s crop. No money changes hands—just a promise or meaningless handshake. In the industry, we call them coyotes.

The coyote gives the fruit to a packing company that washes and boxes the fruit, has it inspected, and sends it to port. The fruit then goes to an importer, or broker, in Los Angeles, or Philadelphia, who passes it to local wholesalers or supermarket distributors across the United States and Canada, who then deliver it to the store you shop at.

Many hands pass the fruit along, but ultimately, the selling price will be based entirely on what those wholesalers and retail chains are willing to pay. Only part of this price will trickle back to Rosa—and only if prices are good and all her mangos sell.

Rosa may also get nothing. She may never see that coyote again, or she may get paid months or even years later.

Breaking it down

What does this look like in terms of dollars and cents? When you pay $1.99 for a mango, after everyone else has taken their share, and all shipping and packing costs are covered, Rosa might get five or six cents per unit. That’s all folks. And that’s only if she is dealing with people who are honest all the way down the chain. 

What can also be an issue, according to the United States’ Perishable Agricultural Commodities Act, which is often enforced by Canada’s Dispute Resolution Corporation, is that fresh fruit and vegetables belong to the farmer until they are paid. The produce is never owned by brokers, distributors, or anyone else involved in-between. Until the farmer gets paid, they’re the ones with the most at stake.

Apromaltby

More fair for everyone

Fair Trade is not completely about money—it’s also about direct trade. A Fair Trade importer will pay enough money up front for harvesting and packing, so someone like Cleida Garcia, general manager of Asociación de Productores de Mangos del Alto Piura cooperative in Peru, and her fellow producers don’t need to hand their fruit to a coyote or a packer. Instead, it stays in their control until it’s on the boat. In Canada, direct imports by sea avoid trucking costs from the United States, and the additional markups of an American importer. Garcia will be guaranteed timely payment and a price that will be profitable.

Garcia will also receive 30 cents for each mango, plus another 10 cents to pay for harvesting, packing, and boxes. We also build an additional premium of 14 cents per kilogram into the price we pay her cooperative to be used for community projects. In other words, when her town sends away 600,000 mangos—enough to fill six sea containers—they receive money that will to pay for things like eye cataract operations or an adapted room for students with special needs at a local school.