Tuesday, April 01, 2008

Cheap Eats

Okay so it seems the majority of America is looking for cheap meals. Good meals made cheaply. My advice? Shop local. Cook from scratch. Eat very well.

So how does that translate in to cheap? Simple economics. The last man holding the stick paid the most for it. What? Well, except the stick grower itself. Let me illustrate. Farmer goes into the pecan business. He buys a plot of ground, tills the ground gets it ready for planting and then sources the trees. The trees begin as 15 foot sticks. Yes, sticks. In four or five years they begin producing a crop worthy of harvesting and preparing for market.

The crop is now for sale. If you go buy the pecans direct from the farmer you pay his price. Usually a very fair price at that. He gets money to keep the farm working and you get pecans you adore eating and baking fine baked goods for all to enjoy.

Or. You go to the market and buy the pecans. How many people purchased these pecans before you did? Well, in some cases the grocer whom you purchased them from and you only pay the mark up the stores decides to set on the pecans. However, usually farmers need other people to buy their crops and grocers don't visit all the farms in America. So then a distributor is involved, the farmer pays him to sell his product to others because a distributor doesn't sell pecans he sells opportunity.

The distributor will sometimes use a broker to find accounts to sell the pecans to various buyers. He gives the broker good price (higher than he bought the product for, of course) usually a percentage of the sale to others. Restaurant chains, grocers, fine food companies, and bakeries to name a few. The distributor pays the broker to find new business he didn't have in the past and keep old customers on the selling chain too.

Sometimes the broker will sell to food producers who will in turn re-package the pecans in various forms to sell to specialty bakeries, hotels and fine gourmet stores to name a few. The broker marks the product up to them. They in turn mark the product up to cover their costs and to sell a premium product to the hotels etc. The hotel, bakery or fine food establishment then marks the product up to make a profit in selling to you. You've seen that $14 bag of trail mix in the mini bar!

So which would you rather do? Pay the farmer or him and all the people in between? Keep in mind that another advantage of buying direct from the farmer is that usually the product you purchase is fresh. It has been harvested within days of your purchase. When you buy using a supply chain, the freshness string gets altered. Either the product is picked green and forced ripened, or is adulterated with chemicals to keep it fresher longer. You can buy produce or other products that are picked fresh and sold fresh but not usually from large chain stores, they just can't deal with the losses.

Keep in mind also that when a farmer is paid a price for his product you are supporting that farmer. You are paying his obligations and his benefits package. When you pay the grocer for theirs you are paying the benefits for all the people who are in the supply line. That's why when you read a story about dairy farmers in California being paid $1.90 a gallon for milk and then go to the grocery store and pay $4.89 a gallon you can understand why the price is so high.

I have no problem supporting my fellow neighbors and Americans. However, I need to be smart about how my dollar is spent. I go direct as much as I can and when I can't I still buy ingredients, not processed foods. And I cook healthy meals cheaply.