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A couple of days ago I bought some Bartlett pears from Argentina for 99 cents a pound in a major chain supermarket in the Los Angeles area. It just seems impossible to me that they could ship them all the way from Argentina and sell them for a profit at that price.
Is there someone here who understands the economics of the produce business who can explain that to me?
Bartlett pears from Argentina for 99 cents a pound in a major chain supermarket in the Los Angeles area. It just seems impossible to me that they could ship them all the way from Argentina and sell them for a profit at that price.
Is there someone here who understands the economics of the produce business who can explain that to me?
A swag:
The shipping company has a contact with the growers and an empty hold.
If the growers don't ship them they can't sell them at any price.
If you had a storeroom with a lot of pears and they were beginning to rot, how would you price them. Even 10 cents a pound would be better than nothing.
If you had a storeroom with a lot of pears and they were beginning to rot, how would you price them. Even 10 cents a pound would be better than nothing.
That makes sense, but the ones I bought were not beginning to rot. I had to wait two days for them to be ripe enough to eat.
It's possible that the pears were a loss leader for the store.
However, they are shipped in full shipping containers. 8 ft by 8 ft by 40 ft long. You can fit a lot of pears in there and the shipping is about $3500 for that size container from Chile. The price per pound for shipping works out to be very low.
Labor to grow and pack the pears is not paid for at American minimum wage. Properly chilled pears will keep fresh for months, so they can come by ship in a refrigerated container and do not have to be flown.
It's possible that the pears were a loss leader for the store.
However, they are shipped in full shipping containers. 8 ft by 8 ft by 40 ft long. You can fit a lot of pears in there and the shipping is about $3500 for that size container from Chile. The price per pound for shipping works out to be very low.
Labor to grow and pack the pears is not paid for at American minimum wage. Properly chilled pears will keep fresh for months, so they can come by ship in a refrigerated container and do not have to be flown.
Thanks. Very interesting. I was hoping someone with insider knowledge would reply. I had assumed that the pears would go by ship and not by air, and I knew the labor on the growers' end is less than here. It seems the low price per pound for shipping is the key here.
Lesson: What appears counter-intuitive to the unitiated (me, for example) may make sense when all the facts are known.
The actual shipping cost of any produce is actually a very tiny amount. I get potatoes here that are shipped from over a thousand miles away by truck, sometimes 2,000 miles, and they are often as low as 30 cents a pound. Once your pears are on a boat, the cost of shipping drops to almost nothing for additional miles at sea. A lot more of the cost accrues through the several different handling stages between the orchard and the checkout register at your supermarket. Think about how many times each pear was moved from one place to another, with wages paid to the workers moving it.
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