How does it make sense that eg grapes from India get imported to Denmark and then get sold here for 2€? How does that economically pay off? For all the different stakeholders involved?

250 views

How does it make sense that eg grapes from India get imported to Denmark and then get sold here for 2€? How does that economically pay off? For all the different stakeholders involved?

In: 2

4 Answers

Anonymous 0 Comments

Every produce has their own structure.

Grape vines, in particular, are very long lived (some live up to 100 years) and produce for a long time (30+ years). So a lot of the costs on the farm are already fixed (land, vines, etc). The biggest variable costs will be fertilizer and labor. Typically farm labor costs are low and are likely to be particularly low in India (very likely less than 10 Euro per DAY)

Barring bad weather, grape vines will just continue to produce, therefore supply can be inelastic and the farmer just sells it for what they can.

Freight costs are the next biggest thing, then the retailer markups. Neither are very high when negotiated over longer terms. Air flown will be much more expensive but on ships, the rates are probably a few hundred Euro per ton which works out to fractions of a Euro per kg.

You are viewing 1 out of 4 answers, click here to view all answers.