Why is fruit/vegetables so cheap despite the time and resources needed to produce them?
In: Economics
Just to add on to this: a lot of crops in the US are subsidized. So even if they’re expensive to produce, the consumer still gets a low price because the government pays for it.
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Economies of scale. Due to large overhead costs (equipment, land, etc) being present in farming even at low volumes, but being relatively stable as production grows, that overhead cost shrinks when calculating cost per unit as production increases.
Let’s say you have a $100k tractor to plant corn. If you plant 1000 stalks of corn, the cost of that tractor is allocated as $100k/1000 units, or $100/unit. If you plant 1 million stalks, your cost per unit shrinks to $0.10/unit in terms of operating that tractor, presuming you have the land to do it already and all else stays equal with the tractor.
Mass production farms capitalize on this significantly, but building these economies of scale takes time and investment. This is why there is a saying that farming only pays off by third generation if you’re starting fresh (pun intended, awww yeeeaahhh).
A whole lot of it is mechanized and automated to a degree. And farmers use migrant labor paid almost nothing to do the labor intensive parts.
If you want to grow 1 carrot, you’ll need a lot of preparation, time, and equipment compared to the output. If you want to grow 100.000 carrots, the amount of equipment, preparation and time doesn’t increase by the same amount. If you want to grow 1 million carrots, you’ll be churning out carrots at a rate that pushes price down.
ETA Thank you kindly for the awards
On a per-unit basis, the time and resources needed to produce them is almost nothing. Yeah the farmer works 7 days a week, but he does so to produce a proportionately huge volume of produce. Machinery and automation (sprinklers, harvesting machines, pesticide distribution.etc) have allowed it to scale up and remain profitable.
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