Problem, or reality?
In Puno, Perú, a farmer sells his harvest of quinoa for under 3 soles the kg while a citizen in Lima will buy that same bag in Wong for 11 soles, almost quadrupling its original value. Everybody knows that in agriculture, the producer is always the one who earns the least, but have you ever wondered why? There are a lot of steps that need to be taken before the food you eat reaches your mouth, and on every step, the price goes up significantly. Farmers, distributors, and retailers all form part of the farming supply chain, a universal process that deals with the movement of raw and processed material from producer to consumer (Investopedia). While not very lucrative to the farmers themselves, there are reasons why this method remains the backbone of today’s agriculture industry.
Supply chains vary amongst different industries, but the chain of agricultural products begins with the harvest and all of the efforts put into the land before the crop reaches a healthy state. Farmers purchase the input supply of seeds, fertilisers, and farming material before the planting season has begun. At this stage, farmers who lack resources are left with a hard task to complete. Having to deal with much uncertainty in their daily lives, they have to play the 'guessing game' when it comes to investing in a certain crop. This job becomes complicated because they are unaware of the situations they might encounter months in advance. Whether it's market, weather, health or biological risks, many factors make the price of agricultural produce fluctuate spontaneously. An unprecedented change in temperature or the strike of a pest could potentially lead to lower yields or loss of income, two things that can be fatal to humble farmers.
This same problem is also the reason why third parties become the gateway from farmers to supermarkets. Large retailers cannot afford the uncertainty that pertains to farmers, which is why they confide in distributors to guarantee a stable amount of goods. This model works well, but it also means that the price must rise to pay the merchants what they deserve. It is easy to dislike the third parties, but in reality, a lot of work is put into the purchasing and delivery of these products. Merchants must allocate the best produce from several different farmers to ensure that their quality and quantity is always on point. They also have to provide transportation from the land to the market and pay the cost of storage. All of the logistics that go into the distribution of agricultural products is, in reality, an elaborate process, and one that farmers might not be equipt to handle.
If the agricultural industry were more fruitful to humble farmers, then maybe they could afford to eliminate the distributor; however, that is not the case. In consequence, most farmers are caught in a vicious cycle which they cannot escape. They don't have the resources needed to take their product to supermarkets directly and thus, must sell them at a much lower price. The high supply of agro-produce in Perú has led to distributors pushing for lower prices, which is why rural poverty prevails. One might think that it is about money distribution, but in reality, there will never be a win-win scenario. While farmers might spend days and nights working the land, distributors and retailers also put a lot of effort into their work.
Third parties exist because of the complexity of the supply chain; if you were to remove them the whole process would collapse. For example, ould you buy from a supermarket where you are unsure if the product of today will be there tomorrow? Consumers like certainty and stability, which is why the supply chain model is constantly followed. If retailers and supermarket chains were to buy directly from farmers, sure, the income of farmers might increase, but at what cost? With an ever-changing supply, the prices would rise and fall quickly, and the consumer would probably seek to buy their products elsewhere. Although inconvenient to the farmer, the increase of prices as you go up the supply chain is a bitter-sweet reality.
When Ariana and I went out to the field to conduct our interviews, we had a fixed mindset about what was going on. We thought that merchants were earning the money that pertained to farmers, but in the end, we found that this wasn't the case. Although farmers spend days working the land, third parties are also engaging in arduous work. While it is easy to blame the distributors, in reality, they are not the bad guys at all. If we eliminated the third parties, not only would farmers lose their link with supermarkets, but the stability of supermarkets would be damaged. Large retailers promise the buyer consistency in products, and with no third parties, the big companies like Wong and Vivanda would not have the guarantee of a stable amount of goods. If this were to happen, a supermarket may have quinoa one week, and the next week, none at all. After realizing this, we saw that we were pushing our documentary in a direction that it wasn't supposed to go, so we decided to change it completely. Although as of now, our film does not speak about the supply chain, I have to say that it was my greatest learning throughout the project when it comes to economic concepts. Don't get me wrong, there is a problem with the price of quinoa in the highlands of Peru, but it isn't related to the supply chain at all.
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