Hourglass on it’s side

strawberrypick.jpgThis article that Brad DeLong posted to his delicious bookmarks is perfectly aligned with my interests. First off it has a wonderful new metaphor for a two sided network effect:

Think of it as an hourglass on its side, says Brian Cook, a research consultant who studies food issues for Toronto Public Health. “You’ve got thousands of farmers on one side, and consumers on the other. In the middle, there’s a bottleneck.”

That’s nice because fleshes out the usual idea of the two sided network as having a bottle neck and emphasizes the grains, the flow, the rate; i.e. the timing. The article is about strawberries; the grains of sand are not single strawberries but truck loads of them. To get the sand to flow smoothly you need to standardize; as the standards become more exacting the growers who fail to fit the standards are displaced from the system.

… McCarthy, sold to a developer last year after an especially gruesome season. Two weeks before the strawberries on his patch were due to glow red, the nearby chain he counted on to accept hundreds of quarts daily canceled. It no longer accepted back-door deliveries. …

Or this example which is about details, timing, capital equipment, etc.

into the lot behind Food Basics in Georgetown. Already in the lot are two 18-wheel tractor-trailers, one finishing a delivery while the other waits its turn.

They are refrigerated, …

“Oh Jesus, oh my God – we’ve got to wait,” he says, gripping the wheel tightly. “We’ve got perishable stuff here. If it’s left in the vehicle in the sun, it’s going to be roasted.”

strawberrypallets.jpgThat example is the counter point to the pattern I usual talk; i.e. routing around the a monopoly bottleneck. In this case as the standardized distribution hub condenses out it displaces the long tail strawberry producers who lack refrigerated trucks or who production doesn’t fit in the required unit size, e.g. an 18-wheeler.

I wrote sometime ago about how the modern strawberry has evolved. Where it once fit the mouth of the sparrow it now fits into the mouth of the buyer. To survive as a modern producer you have to fit the mouth and the throat of your adjacent hour glass bottlenecks.

It is rare to read a well crafted article about displacement. Most such articles fail to grasp nub of what is causing it. Often the tend in these articles is to over identify with the victims of the displacement. Though there is an another kind of article that waxes heroic narratives about the entrepeur creating the hub of the wonders of the market. Between these two over emotional journalistic approaches it is very hard to think clearly about all the externalities involved in the process.

The granularity of agriculture is right up there with Moore’s law one of the forces reshaping the world economy. And it’s been doing it for much longer (see Diamond’s the Worse Mistake, pdf). Drop into any point in history and you’ll find stories of farmers being displaced by technology. For example writing about the rise of urbanism in the late 19th century as triggered by railroads Douglas Rae quotes an expert suggesting that Connecticut farmers are going to need to diversify.

“… his farm decreasing in value, his capital shrinking, his crops no longer paying fairly because of Western Competition, … expert … suggesting “raising … squabs, trout, carp, honey, mushrooms … “

That’s 1890, but it sounds remarkable like Michael Dukakis suggesting that Iowa farmers raise endive. The tragedy here is that the advice is basically bogus. If the distribution channel is changing in ways that dry up opportunities in the long tail then your an idiot if you try to survive by diversifying. The answer is not to become less standard, more eccentric. Rather you needs to be on find a way to evolve; to fit through the throat of the new hour glass. Or maybe you can route around; find somebody willing to open their backdoor.

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