Friday, December 17, 2010

Production & distribution of agricultural products

Source of this photo
At the core of a healthy economical system resides the relationship between producers and consumers. In a large economy deprived of efficient communication systems a third entity appears between the producer and the consumer, the distributor. In this context, the producer is disconnected from the beneficiaries of its products, and the distributor bridges this gap, not only by establishing a distribution channel, offering producers access to a market, to a group of consumers, but also by giving feedback to producers about market demands. History shows that in almost all such systems the power of the distributor increases in excessive proportions, to become a nuisance for the overall economy.

The distributor controls the flow of goods for a profit. There are different ways to increase profits:
  • Increasing efficiency
  • Increase the flow by
    • inciting consumers to buy more
    • increasing the market by adding more consumers
    • diversification
    • etc. 
  • Force the producer to sell at lower costs

The best example is the Wal-Mart network, which is rightfully criticized for chocking producers and for spreading consumerism.

In a healthy economy the financier and the distributor have secondary roles. They are service providers between producers and consumers, they MUST NOT control/rule the economy. Economy is about production and exchange of value. If too much power is granted to distributors and financiers they will inevitably suffocate production forces and reduce society to agents of consumption. Evidence of the second effect lies within official reports that talk about consumers and tax-payers instead of citizens.

The multitude movement restores the role of the producer. This is a natural process as the new technology becomes ubiquitous. It is possible now for the producer to maintain direct relations with the consumers. The role of the distributor within the exchange mechanism is greatly reduced. We are heading toward a more healthy economy!

By AllOfUs


  1. There is an apocryphal story by a Kenyan herder who, with his brother, decided to grow potatoes one year. A buyer came and said, "I'll give you $2 for 200 potatoes in a bag, or you can watch your potatoes rot in the ground or turn green above ground." It cost about $2 to grow the potatoes -- and after a few huge markups by him and other middlemen, street vendors in the city sell 2 cooked potatoes for $2. So the crop sells for 100 times more in the city at point of use, than the farmer gets. Guess why the rural areas of the world hemorrhage population to the cities? All the money is sucked out of the farmers! So why are Idaho potato farmers different? In the 1800s, they set pine logs at an angle from each side to cover dry washes (gullies) on hillsides near their fields. They piled hay on the logs. They put doors on openings at the top and bottom. They poured potatoes in at the top, and took them out at the bottom -- automatic FIFO (first in, first out) inventory control. The ground temperature kept the potatoes cool enough that they didn't rot, and it was dark enough they didn't turn green. They could refuse such predatory offers, and wait for sanity in the market. Then they could take part of their crop at a time to market themselves, in their own or a borrowed wagon. Nowadays, they could form a cooperative, manage it with computer technology (ICTs), and share a truck. That's the difference awareness and creativity in crop storage and marketing can make. It's even better if you make alcohol from potatoes and / or mangoes, etc., and use it (or vegetable oil) to fuel the truck, instead of diesel.

  2. Thanks for this very nice little story Mark. Telling a story is a powerful way to convey information.