The Finance Buff

I don’t know why I missed out for so long. I visited the farmers market in my town for the first time last weekend. What a pleasant experience! There are a lot of vendors selling produce. The fruits and vegetables don’t look as neat as those in the grocery stores but they taste a lot better. You are buying what’s in season, not fruits stored in a warehouse for six months. And you can shop different booths and compare quality and prices. When I shopped from grocery stores, I just go to one and buy everything there. It doesn’t make sense to drive to different stores for different things. At the farmers market, everybody is at one spot.

One thing I’m not sure of is that whether the vendors are actually farmers or are they just small resellers who buy from the farmers and sell at the farmers market. Does anybody know? I guess it doesn’t really matter that much because even if they are not real farmers I’m still getting fresh local produce. Just curious.

One vendor was selling eggs. Large white or brown eggs for $2.50 a dozen. It’s a good price. If I didn’t have enough eggs in my fridge already I would’ve bought some brown eggs because I thought brown eggs are better than white eggs and he was selling them for the same price. I never really knew what the difference is between brown eggs and white eggs. All I knew was that brown eggs are more expensive in the stores. So I searched on the Internet. It turned out that it’s just the breed of the hen. Some breeds lay white eggs and some breeds lay brown eggs. Other than that, there is really no difference. According to the American Egg Board,

"Shell color is determined by the breed of hen and is not related to quality, nutrients, flavor or cooking characteristics. Since brown egg layers are slightly larger birds and require more food, brown eggs are usually more expensive than white." (FAQ #3, Learn More About Eggs)

So why did I think brown eggs are better all these years? Because they are more expensive. You get what you pay for, right? This again falls into selling hope. Only because something costs more to produce does not make it more expensive in the stores. The consumers have to perceive some additional value. If consumers don’t perceive any benefit, they will never pay more for it. If consumers don’t pay more, egg farmers will not raise the larger birds which eat more food and lay brown eggs because the farmers’ profit margin would be smaller. If consumers are all well informed, there should be no brown eggs in the market. That’s why branding is so important in the business world. It creates difference when there is none.

It’s an interesting economic phenomenon. Businesses can sell something at a higher price with absolutely no additional value to the consumers. Or they can create some perceived value (like branded prescription drugs versus generics) and sell at a higher price. What other examples can you think of? Vitamin Water?

By the way at farmers market I saw arugula for the first time. I read some references to arugula and Obama in Newsweek but I didn’t know what it was. Now I know.

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