how can fruits grown, harvested, transported on the other side of the world to my local grocery… can cost less than 2$. How is this possible?
In: Earth Science
These days, overseas transportation is not expensive. To send a peach from Argentina to Thailand and then to California may cost only a cent or so for a product that may ultimately cost 75 cents, and a shipping container full may cost only $1000 to transport. It costs much more to transport peaches from a port on the pacific to a warehouse in your city by truck than it does to transport it across an ocean, by a factor of approximately 10.
Comparative advantage describes why different countries produce different goods. Perhaps, it costs 10 cents to grow a peach in Argentina and 15 cents to grow it in the USA, while in the USA it costs 3 dollars to grow a bushel of corn and in Argentina it costs 3.50. this could be due to environmental, cultural, legal or infrastructure differences.
In this example, Argentina has a comparative advantage in producing peaches and both countries make more money if the USA only produces corn and Argentina only produces peaches.
Since trade and transportation cost so little, even minor comparative advantage cause industrial and agricultural trade to globalize.
We pay people significantly less in other nations, and move things in bulk across a long time, to have it cost as little (plus companies get paid by governments or avoid being taxed for the services in favor) as possible.
The government subsidizes the farmers at the source country. The government makes a trade deal at the consuming country. You pay for it, in taxes.
Local farmers can’t compete as they aren’t subsidized and so you pay the true value of the product.
Also consider that everything is expensive in the U.S.A. The land costs considerably more, and the heavy regulations drive the production costs way up. In many other countries, what regulations that do exist do not have as much of an impact, and they can bribe their way around those that do.
I also want to add that fruit farming in South America is sometimes an extremely violent, oppressive industry where farmers are murdered. You can Google the horrible treatment of banana farmers and the gross wrongdoings of companies like Chiquita and Dole. Every single time I eat a banana I know I am contributing to great evil in the world. These farmers get paid slave wages so I can eat a banana in California for 75 cents.
And can someone also explain why we get fruits out of season and they suck? If it comes from warm countries that are always in season why does it get to me in Canada and is crappy?
Really organized and efficient systems of transportation and…
Prison labor/cheap labor in locations where laws are very loose on how much companies have to pay people, and how much waste they can produce.
Usually those places (the growers) have those laws in place due to governments put in place in wars where other governments (the ones where they sell 2 dollar fruit) helped their government (the ones that grow the 2 dollar fruit) win.
To sum it up. One country helps a group of people in another country who will sell them 2 dollar fruit take control of the other country. Then in return that group of people makes all the people in the country work cheap so they can sell stuff to the country that helped them win.
To sum it even further, rich countries make poor countries fight themselves until someone wins who will sell the rich country fruit as cheap as possible. They can do that because they’re rich.
🤷♂️ can’t sugarcoat fruit wars, even in Eli5.
My answer is, probably because fruits on the other side of the planet such as Thailand, guatemla, cuba etc are poor or lower income countries. So maybe that one organic apple your eating now costs you 1 dollar USD, will cost you 30 cents USD in Thailand. On top of the apples from cheaper countries, is along with bulk dealings. When you sell bulk it is always cheaper or it’s supposed to be. So when they sell cheap apples along in bulk it should always make it cheap, but it will be marked up a bit, so the store can make some money.
Latest Answers