Volume 5, Number 26 August 5, 2002
"Boot Straps" Mathematics
By Dr. Ridgely Abdul Muímin Muhammad
We at Muhammad Farms know based on the teaching of the Honorable Elijah Muhammad that America has no intentions of allowing Black people to farm successfully and independently. We know from the Honorable Louis Farrakhan that the "merchants of death" control the whole food industry and intend to poison us. Therefore we strive to revitalize an independent agricultural system that would provide safe and wholesome food to our people. However, as we strive to grow and distribute food we are faced with market and logistical problems that the city consumer is not aware of.
People in the city see that food either comes from the grocery store or from the fast food restaurant drive through window. They have no idea of how the food was grown, where it was grown, how it was processed, nor how it got to the store or restaurant. Americans spend only 6% of their income on food, while the rest of the world spends an average of 21.5% of their income for food. In other words the rest of the world has to work almost four times as hard to eat as do Americans. So Black Americans like White Americans basically take food for granted.
This year at Muhammad farms we were blessed to produce some superior watermelons in terms of taste. We shipped some of our melons to Detroit, Chicago and Washington, D.C. Even though these locations are about 1,000 miles from our farm in Georgia, some people who ordered the melons did not consider the issue of transportation costs. They did not understand how the market works and how the location of the major markets in comparison to the seasonal production areas affect the local wholesale price and what the farmer receives.
I am an agricultural economist and nothing puts Black people to sleep like a bunch of numbers and tables (smile). However, the language of mathematics is the method that an economist must use to express his point and mathematics is the language that a farmer must understand if he plans to stay in business. However, it seems that the only mathematics that the common consumer understands is the price tag at the market. The consumer has no idea how his or her desire to get the most for the least affects the long term survival of safe and reliable food systems. Cheap could get you killed. In fact cheap food, and a system distorted by racists with the intent to commit genocide, has produced a deadly food system and a dismal future for both farmers and consumers.
But letís get down to the math. Watermelons are grown in many parts of the US, however because of climatic conditions they can only be grown within a very narrow window in most parts. For instance although watermelons can be harvested in late June and early July in Georgia, they can not be grown and harvested in Indiana until late July or early August. Although watermelons are eaten all across the US, the market price is set based on the major population centers such as Chicago-Detroit and New York-New Jersey. The market price is based on truck load shipments of 2,000 melons per shipment. For this analysis we will make certain simplifying assumptions as illustrated in Table 1: 1. the cost of producing/harvesting watermelons is $1.00 per melon, 2. the farmer would like to get an "expected price" of $1.50 per melon, 3. Chicago will be the destination, 4. the three production areas are Georgia, Tennessee and Indiana., 5. transportation costs will be $1 per mile per shipment.
From July 1 to July 15 Georgia is the closest production point for the Chicago market. Therefore, the combination of Georgia expected farm price ($1.50) and the transportation cost ($1,000 per truckload) to the Chicago market set the "market price" to the broker at $2.00 per melon. The consumer then pays and average of $5.00 per melon (Table 1). However, starting around July 16 Tennessee melons start hitting the market. But Tennessee is only 500 miles from Chicago, therefore the transportation cost drops in half and now even though the Tennessee farmers still get $1.50, the broker can now pay a total of $1.75 per melon. The broker can still buy melons from Georgia, but he will tell the Georgia growers that he can get ALL the melons he needs at $1.75. So if the Georgia farmer wants to sell his melons he must accept $1.25 (Table 2).
As the watermelon season goes on Indiana farmers now get into the act, but they are only 200 miles from Chicago. They want $1.50 per melon and the broker is willing to pay that and pay the transportation cost of ($200 per load) making his total cost of $1.60 (Table 1). Now the Georgia farmer must accept an even lower farm price of $1.10 if he wants to sell melons in Chicago.
Well why doesnít the farmer go somewhere else? Chicago has set the "market price", so that is what the farmer can expect just about everywhere including his local supermarket chains. Why doesnít the farmer use his own truck? Using his own truck will not cut transportation cost per melon even if he had such a truck. He still has to pay for the truck, pay gas, pay a driver and put tires on the truck. Why doesnít the farmer just sell his melons locally at the retail price? He produces too many at one time for the local market to absorb.
In Table 2 we also show what happens when the Georgia farmer ships 1,000 melons instead of 2,000. His cost per truck load does not change, because he is not charged by the weight but by the mileage. Therefore, from July 1 to July 15 he can still break even, $1 (price) minus $1 (production cost) equal $0 profits. However, beyond this point he would be losing money to ship 1,000 melons or less. At this point he just leaves the melons in the fields
Harvesting 2,000 melons per shipment and selling 2,000 melons per city presents yet another logistical nightmare for Black farmers like we here at Muhammad Farms. Holding our prices to where we can survive becomes almost impossible. Because we produce a quality melon and represent a "good" cause, the consumer could be willing to pay more for our melons. However, I guess until our label or "mark" in the melon market becomes as desirous as beasts like "Reebok" and "Nike" in sports shoe market, we will just have to accept crumbs from the consumerís table. In the meantime we have to compete with the big white farmers who got a leg up using our tax dollars, while we, Black farmers, are still looking for our "boot straps" to pull ourselves up by.
However, if a group of people in each city would go into the watermelon distribution business and be willing to accept a flat brokerís price of $2.00 per melon for the entire summer, and could guarantee truckload shipments of 2,000 melons, and if Black consumers would be willing to pay $5.00 per melon in those cities, then.... Oh well, so much for dreaming. Iíve got to go back to the fields.