weeks in advance. However, the institutional buyer would purchase all 800 lbs of tomatoes over the growing season. We will assume the paperwork is the same for both markets, as well as the storage and handling facilities on the farm. The vehicles for the two markets are the same as well. Given this information, which market would be more profitable?
Table 1 shows total estimated cost to produce tomatoes and market them through the farmers' market is $1.96 per pound ($0.38 $1.58). Total estimated cost to produce tomatoes and market them through the institutional market is $0.83 per pound ($0.38 $0.45). So which market will return the most profit? That depends upon how the prices for the two markets compare