The obvious costs that spring to mind are packaging, transport and commissions. But how many producers take that last one – commissions – and unpack it further? In fresh-produce markets, 12,5% is the norm. Of this, 5% goes to the market authority and 7,5% goes to the market agent. If the producer can market his products elsewhere at a lower cost, then he has every right to do so.
What market salespeople do
Market salespeople are encouraged to analyse what they give their producer in terms of services, advice, knowledge, skills and trust. Each of these components has a cost and a value to the producer, which impacts on his business. And the value should always exceed the cost. What of the 5% market dues? What does the producer get for his “investment” here? The market is supposed to supply the infrastructure and support services to facilitate the sale of the produce by the market agents. Is the producer satisfied with what he’s getting?
I have long been ranting about the appalling state of our markets and I often hear senior producers asking why they should pay for something they don’t get.But what is that elusive “something”? For starters, let’s have clean facilities that comply with modern food safety and hygiene standards. Some improvement in security would help a lot, especially when it comes to produce theft. Good, committed management would work wonders too. Less political interference from City Hall would be miraculous, and I could go on.
I wonder how many market managers could sit down with a producer and discuss the value he gets for his 5% and convince him it’s a good investment. I wonder how many have ever done the calculations to see how they match up to the opposition. That’s what people do in business, by the way.
They regularly compare themselves to their opposition and make adjustments as required. Many tell markets to “adapt or die”, and we have grandiose proposals like the Ministerial Interim Committee on Fresh Produce Markets. But markets must first go back to basics to re-establish the foundations for the future. Having a serious look at the cost of using a market and a market agent is one of these basics.