June 30, 2014 | In: Services
The Weird Economics of Watermelons
I was doing some groceries the other day and I thought Watermelons could be refreshing in this hot Montreal summer, so I bought one. It was on special for $2.99, the watermelon weighed something like 4 kilos, or about 9 pounds. That watermelon came from Florida, which is a 1500 miles away or a 22.5 hour drive (non-stop).
Then it struck me – $2.99 for such a big item is cheap, very cheap, I mean very, very cheap. Let me tell you what happens for that watermelon to reach me:
- The owner of the watermelon business must spray the farm against insects and reptiles. He must also ensure that it’s watered all the time (watermelons use a lot of water) and he must ensure that he’s using the right soil.
He should then hire a bunch of illegal immigrants to physically pick those melons and put them in a warehouse in a pyramid shape.
He should then hire another bunch of illegal immigrants to package those watermelons.
He should then contact the wholesale fruit and vegetable merchant and sell him the watermelons.
The merchant should ask his secretary to prepare the export documents and then use one of his trucks to export the watermelons to Montreal.
The truck has to go through the customs and then head to Montreal.
The truck should then delivers the watermelons to a fruit and vegetable wholesaler in Montreal.
The fruit and vegetable wholesaler should dispatch the watermelons, along with other vegetables and fruits, in one truck to the grocery store I buy from.
Now the question is, how much expenses did that watermelon incur before reaching me. As you can see, it’s a lot, and there are many, many indirect/hidden costs that I haven’t even mentioned anywhere. I just mentioned the direct costs.
Can that watermelon really sell for $2.99? Apparently, it can. Maybe there’s just more to this thing, but for now, I will enjoy my watermelon while we all pretend that the watermelon business is a profitable one.
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