Crop Comparison and We

January 2nd to 10th, 2008 La Encantada, Peru

Price Structuring and Crop Comparison

I´ve spent the past week working with the mango farmers. We have covered topics such as price structuring and crop comparison. We are contemplating growing the tomatoes ourselves rather than buying them from the regional capital. Most of the farmers agreed it would be more profitable but I wanted to make sure so we did a formal analysis.

We first calculated that we could grow tomatoes for S/. 0.30 per kilo; it costs S/. 0.50 per kilo to buy from the market. Therefore, we would profit from grow the tomatoes ourselves. Unless, the opportunity cost of tomatoes was higher than the current crops we grow. After a brief presentation on opportunity cost we put the theory into practice and did a comparison analysis between tomatoes and a corn (the crop we would be replacing). After crunching the numbers, we discovered that tomatoes yield a 10 to 1 profit to corn.

The farmers were ecstatic because it was the first time they put all this down on paper, which allowed them to see how great the difference really was. Some farmers even developed matrices comparing several different crops.

ebay

When I returned to the States for Christmas I carried 130 bags of dried fruit home. Mom and I set up ourselves on ebay and are selling the dried fruit in quantities of 1 kilo. You can search us on ebay: dried mangoes. Or you can email me directly and I will coordinate your order with my mom.
We put the price structuring theory to practice by comparing our prices to those of our ebay competitors´. Due to our extremely high profit margins, we were able to slightly undercut the closest competitor.