The Law Of Perishables Marketing

[petrushkagoogol]

Is it possible to define "The Law of Perishables Marketing" as "The shorter the shelf-life of the perishable, the more practical it is to sell it in an open-air market, than a closed retail outlet." ? 

[JMJones0424]

Sure it's possible, you've already done such a thing.  The important question is does the law you stated accurately describe reality?  I don't know the answer to this question, but as someone that produces perishables for sale in open-air markets, I think you may be missing a few things.   I am assuming here that by open-air market you are referring to a market where there are very few middle-men and little distance and time between the producer and the purchaser of a perishable good.  The contrasting market would be a supermarket where perishable goods are produced far away and pass through numerous purchasers and shippers before finally arriving at the retailer that sells to the consumer.

 

In some societies, open air markets are the norm for numerous goods, regardless of their perishability, so your law doesn't at all apply in these markets. 

 

In other societies, such as the one I live in, it is unusual for consumers to purchase directly from producers.  In these situations, the shelf-life itself isn't what determines what is more practically sold in open-air markets, but rather the consumer's desire for items that aren't available in supermarkets.  A tomato that can survive shipping and refrigeration for a month or so is not the same product as a tomato that is vine ripened but must be consumed within a week or two of picking and bruises easily.  This market isn't necessarily constrained by perishability, but rather the consumers' desire to pay more in money and time (you have to go to the farmer's market rather than buying at the supermarket) to source marginally superior products.  It is not the case that this limited market is large enough in some places to support large-scale production of goods, and it is not the case that this market is driven by the perishability of the produce alone.

 

The eggplant I grow is superior to anything found in a nearby supermarket, however, so few people in my area both like eggplant and are willing to pay the price that I require to produce it that it doesn't make sense for me to grow a lot of eggplant and sell it in an open-air market.  This is regardless of the perishability of the eggplant.

[petrushkagoogol]

Sure it's possible, you've already done such a thing.  The important question is does the law you stated accurately describe reality?  I don't know the answer to this question, but as someone that produces perishables for sale in open-air markets, I think you may be missing a few things.   I am assuming here that by open-air market you are referring to a market where there are very few middle-men and little distance and time between the producer and the purchaser of a perishable good.  The contrasting market would be a supermarket where perishable goods are produced far away and pass through numerous purchasers and shippers before finally arriving at the retailer that sells to the consumer.

 

In some societies, open air markets are the norm for numerous goods, regardless of their perishability, so your law doesn't at all apply in these markets. 

 

In other societies, such as the one I live in, it is unusual for consumers to purchase directly from producers.  In these situations, the shelf-life itself isn't what determines what is more practically sold in open-air markets, but rather the consumer's desire for items that aren't available in supermarkets.  A tomato that can survive shipping and refrigeration for a month or so is not the same product as a tomato that is vine ripened but must be consumed within a week or two of picking and bruises easily.  This market isn't necessarily constrained by perishability, but rather the consumers' desire to pay more in money and time (you have to go to the farmer's market rather than buying at the supermarket) to source marginally superior products.  It is not the case that this limited market is large enough in some places to support large-scale production of goods, and it is not the case that this market is driven by the perishability of the produce alone.

 

The eggplant I grow is superior to anything found in a nearby supermarket, however, so few people in my area both like eggplant and are willing to pay the price that I require to produce it that it doesn't make sense for me to grow a lot of eggplant and sell it in an open-air market.  This is regardless of the perishability of the eggplant.

 

Open air markets -

• Are direct interfaces
• Are not a logistical nightmare
• Involve lower overheads like refrigeration
• Encourage local producers and allow them to compete with big supermarket chains
• Are a fillip for organic farmers

[JMJones0424]

As a seller at open air markets, I disagree that they aren't logistical nightmares.  I think our nightmare may defer, though.  In order to sell my product, I must either rent a space and sell it directly, which means I am not producing while I am selling, or I must sell to a seller that buys from other producers as well and trust this person.  Refrigeration is certainly an overhead, but per unit of food produced, I think factory farms can produce more food with less overhead than I ever could.  Not all products require refrigeration anyway.  Farmer's markets are certainly good ways for local farmers to sell their produce, but this is kind of a tautology.

 

I don't necessarily disagree with your claim.  I just think that it's more complicated than the simplistic law you proposed when you opened this thread.  I'm all for farmer's markets.  It's how I make a significant portion of my income.  But the local food movement is not a panacea, and in many societies outside of mine, is actually the reason why there is insufficient food production.

Edited April 29, 2018 by JMJones0424

[Maine farmer]

 

Open air markets -

•  
• Encourage local producers and allow them to compete with big supermarket chains
•  

 

Actually, the "Open air markets" don't really compete with big supermarket chains, but are more of a niche market, which can be more profitable only if there are not too many producers trying to fill the niche.  Big supermarket chains have a huge cost advantage now that they are well established, because they control access to a large number of consumers, so they can dictate prices to producers.  

[petrushkagoogol]

As a seller at open air markets, I disagree that they aren't logistical nightmares.  I think our nightmare may defer, though.  In order to sell my product, I must either rent a space and sell it directly, which means I am not producing while I am selling, or I must sell to a seller that buys from other producers as well and trust this person.  Refrigeration is certainly an overhead, but per unit of food produced, I think factory farms can produce more food with less overhead than I ever could.  Not all products require refrigeration anyway.  Farmer's markets are certainly good ways for local farmers to sell their produce, but this is kind of a tautology.

 

I don't necessarily disagree with your claim.  I just think that it's more complicated than the simplistic law you proposed when you opened this thread.  I'm all for farmer's markets.  It's how I make a significant portion of my income.  But the local food movement is not a panacea, and in many societies outside of mine, is actually the reason why there is insufficient food production.

 

 

Actually, the "Open air markets" don't really compete with big supermarket chains, but are more of a niche market, which can be more profitable only if there are not too many producers trying to fill the niche.  Big supermarket chains have a huge cost advantage now that they are well established, because they control access to a large number of consumers, so they can dictate prices to producers.  

 

Have you heard of the Japanese Management technique called "Kanban" ?

 

It was developed by Toyota, for manufacturing, but the underlying philosophy could be used in perishables marketing.

 

Key features (as applicable to perishables marketing) -

 

* Little or no inventory

* Low latency

* F2F for producers-consumers

* Limited clientele, so demand is assured, and has low variability

* Large number of small orders

 

I think this should work ...... 

 

PS - If you define the producer-consumer chain as the "Farm to Fork" algorithm, in the farmers market there is one link buyer to seller. In the retail environment one link gets added, buyer to retailer to seller. When the commodity is perishables with a short shelf-life, this becomes a major latency factor when -

• retail is not mandatory
• shelf-life of the perishable is very low, say 2 hours or less  :vava:

 

 

Edited May 1, 2018 by petrushkagoogol

[JMJones0424]

It is laughable to think that I can limit inventory when I must plant four to nine months prior to harvest.  Toyota's production model has almost nothing to do with mine.  I spend four months out of the year collecting composting materials alone.  My operation is a year-round engine that pumps out a specific amount of goods, and it is my job to determine which goods are more likely to sell in a niche market.  I do not produce cars.

 

Farm to fork only works if there is a sufficient number of forks to farm for.  Where I live, there are not.  In my community, the vast majority of consumers buy their produce from supermarkets, as it is cheap and convenient, and it doesn't matter how efficiently I produce, and how much better my product, I cannot provide a product at the cost to the consumer as that found in the supermarket.  It would be folly for me to try.  Instead, I can better than break even because, while my labor costs are far greater than that of factory farms, I can provide a product that is more desireable to a small amount of consumers at a price they find reasonable which exceeds that of the inferior or non-existent example that is found in a supermarket.

 

This has almost nothing to do with the perishability of the product, and for that reason, in my local market, your proposed law does not explain reality.

Edited May 1, 2018 by JMJones0424

[petrushkagoogol]

It is laughable to think that I can limit inventory when I must plant four to nine months prior to harvest.  Toyota's production model has almost nothing to do with mine.  I spend four months out of the year collecting composting materials alone.  My operation is a year-round engine that pumps out a specific amount of goods, and it is my job to determine which goods are more likely to sell in a niche market.  I do not produce cars.

 

Farm to fork only works if there is a sufficient number of forks to farm for.  Where I live, there are not.  In my community, the vast majority of consumers buy their produce from supermarkets, as it is cheap and convenient, and it doesn't matter how efficiently I produce, and how much better my product, I cannot provide a product at the cost to the consumer as that found in the supermarket.  It would be folly for me to try.  Instead, I can better than break even because, while my labor costs are far greater than that of factory farms, I can provide a product that is more desireable to a small amount of consumers at a price they find reasonable which exceeds that of the inferior or non-existent example that is found in a supermarket.

 

This has almost nothing to do with the perishability of the product, and for that reason, in my local market, your proposed law does not explain reality.

 

This is the heart of Kanban, which the mantra used by Japanese conglomerates like Toyota.

 

IMHO a variant of this, for perishable goods, would be a good strategy for individual sellers, and probably, even SME's involved in selling farm produce.    

[JMJones0424]

OK, what is Kanban?  Do you mean the model of manufacturing that reduces warehousing prior to sale to the consumer?  If so, this is a useless model for produce production.  The calendar dictates my production schedule far more than any kanban wishes.  I try to extend the growing season through greenhouses and shade cloth, but the idea that I could apply kanban to my small farm is ludicrous.

 

Even large scale growers do not use this method.  Instead, different regions produce crops at the optimum time in their area and the crop is then shipped worldwide.  This is why in January it is cheaper to buy a pepper in the US that was grown in Israel than it is to buy one that was grown ten miles away.

 

Your law is fundamentally flawed.

Edited May 2, 2018 by JMJones0424

[exchemist]

OK, what is Kanban?  Do you mean the model of manufacturing that reduces warehousing prior to sale to the consumer?  If so, this is a useless model for produce production.  The calendar dictates my production schedule far more than any kanban wishes.  I try to extend the growing season through greenhouses and shade cloth, but the idea that I could apply kanban to my small farm is ludicrous.

 

Even large scale growers do not use this method.  Instead, different regions produce crops at the optimum time in their area and the crop is then shipped worldwide.  This is why in January it is cheaper to buy a pepper in the US that was grown in Israel than it is to buy one that was grown ten miles away.

 

Your law is fundamentally flawed.

Kanban is what we call "just-in-time" and is indeed the concept whereby inventories are kept to a minimum, by having suppliers deliver components or ingredients regularly, just before they are needed in the production process. It is of course designed for industrial manufacturing, perhaps most famously the automotive industry.

 

For fresh farm produce and other perishable goods I suppose it semi-applies, in that for perishable goods quick delivery and sale, without a long residence time in storage, is of the essence. But as you say, production is highly seasonal, so if a supermarket wants to supply continuously it must uses a series of sources in rotation, as their production peaks. 

[petrushkagoogol]

Kanban is what we call "just-in-time" and is indeed the concept whereby inventories are kept to a minimum, by having suppliers deliver components or ingredients regularly, just before they are needed in the production process. It is of course designed for industrial manufacturing, perhaps most famously the automotive industry.

 

For fresh farm produce and other perishable goods I suppose it semi-applies, in that for perishable goods quick delivery and sale, without a long residence time in storage, is of the essence. But as you say, production is highly seasonal, so if a supermarket wants to supply continuously it must uses a series of sources in rotation, as their production peaks. 

 

You seem to have put things in perspective ....