1. A group of Sacramento Valley rice farms are owner-members of Farmer Rice Coop
ID: 352719 • Letter: 1
Question
1. A group of Sacramento Valley rice farms are owner-members of Farmer Rice Cooperative (FRC). They are considering where to market their rice. The local option is through a one million hundredweight contract with Nugget Markets that offers $25 per 100 pounds sold in the Northern California area. The second option is through a one million hundredweight contract with Olam for $25 per 100 pounds sold in Ghana. FRC asks you about sustainability considerations in evaluating these two options.
a. Name and evaluate, in the context of this rice contract, the applicability of three common sustainability benefits claimed for selling locally (or how they are not applicable). Discuss at least one for each of environmental, social and economic claims.
b. Name and evaluate the applicability (or not) in the context of this rice contract, three common sustainability benefits claimed for selling globally and especially in a poor West African country such as Ghana. Discuss at least one for each of environmental, social and economic claims.
c. Discuss sustainability advantages to selling in both markets for FRC, looking towards future seasons for which contract prices and specifications are not yet set.
Explanation / Answer
The benefits of selling rice locally are Economic benefits (Economic factor): It helps in eliminating middle person by selling locally, hence farmers can get additional money. In this case even through price for selling locally is same as price for selling outside, the major advantage would be flow of goods. i.e. locally produced goods will flow within the community which will increase employment opportunity in local community. This helps in sustaining and developing local community. This create more local ownership. Quality of rice: By selling locally, quality of rice can be maintained. This helps in providing better quality of rice to customer. It is also easy to get feedback of product. Environmental Aspect (Environmental factor): By selling locally transportation requirement can be eliminated. This helps in reducing pollution. Ethics (social factor): Since rice was produced by using local resources it is always ethical to sell locally serving local society. If local super market imports from other places for higher cost, then local population will not get benefit of its resources. The benefits of selling rice internationally especially in north African countries like Ghana are Economic benefits: International trade always fetch better price then local market. International trade also helps in reducing trade deficit for country created by excess buying from international market. Hence country will gain economically. Social factor: Africa is the poorest continent among all the continent. Hence many times it fails to produce resources required for its sustainability. Hence selling rice to African country will help in balancing social environment in Africa. It is also like serving humanity. Environmental factor: By selling rice to poor country mass displacement of humans can be prevented, this helps in preventing pressure on land in other part of world. Poverty also leads to social unrest which might lead to wars. Hence lead to environmental destruction. 1. The main advantage of selling to both local and foreign market is avoiding market volatility. Today price of both local and foreign market might be same, but in future it might vary. The price might be higher in home market or in foreign market. By having both market volatility can be reduced. There are other factors also which are listed below Economic factor: by selling in international market trade deficit can be reduced which helps in maintaining trade balance for country. By selling locally economic activity within community increases and there by results in economic prosperity of community. Social factor: By selling in international market, hunger in poor country can be eliminated while selling locally fulfill ethics of serving local community.
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