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.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

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