Video Of Terminal Market Wholesalers Does Not Portray Their True Function
Jim Prevor’s Perishable Pundit, February 2, 2011
Someone going by the name Electronic_Titan made a video titled Produce Salesman and Terminal Buyer. It is passing around the industry and several people sent it to us.
It is funny in the sense that it plays on a lot of the stereotypes that people have of terminal markets.
It also is very unfair.
When we worked on Hunts Point, we handled a lot of product on consignment or on a price-after-sale basis. The Pundit Poppa taught us quickly that to serve our shippers, the most important thing we had to do was sell the product so that the shippers could send us more. Of course, there was often unhappiness with the price but, understood correctly, we were being used to keep all their other sales at higher prices, which is why they shipped to us week after week.
The key tool to keeping a shipper strong is that he has another place to send the product. Although sometimes terminal market wholesalers have specific orders to fill and so function as defacto buying agents for retailers or foodservice operators, one thing that differentiates the big terminal markets is that they are much more flexible on the quantity and quality they can accept.
What typically happens is that shippers sell everyone in the world who will buy at their fixed FOB. This can include wholesalers who need the product to fulfill set orders, but typically the shippers go first to their retail customers and their foodservice customers.
But often shippers have a problem. If they have 40 trailers of product today and their customers buy 35, what are they to do with the last 5 — considering they have 40 more coming tomorrow?
They could go back to their customers and, perhaps, if they have a good relationship, the customers will try to help them. But very likely they will say that the only way they can buy more is if they go on special with the product, and to do that they will need a new price not only on the extra trailer they will buy but on the ones they have already bought.
So selling to a terminal market is often a way of getting the last product sold that doesn’t impact the price on product already sold.
The video lacks all this nuance, but the stereotypes will get their share of laughs: