Value versus cost

When a farmer decides to buy a new tractor, does he choose the shiniest, most expensive model?

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It’s hardly likely any farmer would spend his hard-earned money so frivolously. The more likely scenario will have a farmer investigating all aspects of the machine before making a decision. In essence, he’ll seek out the machine which offers the best value for money.

Agents and markets
If we apply this way of thinking to a fresh produce market, the question arises: ‘How many farmers measure the value of the services they receive and pay for from both market agent and market authority?

The combined cost to the farmer will be about 12,5%. How many will look at that 12,5% and ask themselves: ‘What value am I getting for my money?’ Professional farmers (that is good, not necessarily big) will answer that question with ease and in detail. They constantly monitor all marketing costs. They also ensure they have a good relationship with the market agent and visit the market regularly.

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You can be sure they are getting value for money out of the 7,5% that goes to the agent. However, when it comes to the 5% market dues paid to the market authority, it’s a somewhat different scenario. The facilities provided are crucial to the farmer’s ultimate success on the market. Does the market offer a clean and safe trading environment? Is the farmer’s money handled correctly and safely? Are the cold rooms and ripening facilities in good working order?

Is the market paying over the farmer’s money to the market agent promptly so that the latter can comply with the law and pay the farmer within five working days? Finally, what is the market doing to attract buyers to the market?

Addressing the problems
If the farmer cannot tick all the boxes for both market agent and market authority, he needs to identify problem areas and address them. The market agent is keenly aware of the relationship with the farmer and will no doubt seek to satisfy the client. The market authority, in most cases, will also want to respond positively but whether it can do anything constructive within the constraints of a bureaucratic system is an open question.

As for farmers, they will measure the value against the cost!