In the developed world, the Produce Auction has lost its significance as the key interface between produce sellers and produce buyers. In some jurisdictions it has ceased altogether, in others it is only a shadow of its former self. Auctions ocurred at places where produce growers brought their fruits and vegetables in the hope to find a buyer. Buyers came to where growers were bringing their produce in the hope of finding the fruits and vegetables they needed to buy.
The places where the auctions took place were referred to as markets. The auctions themselves were the process of bringing together buyer and seller. That typically involved a man, an auctioneer, with a commanding voice and the ability to read an audience. The reason the auctioneer needed the ability to read his audience was that the audience was not able read price tickets on the produce offered - because there are no price tickets at the auction.
This brings us in a direct line to the core function of the auction in economic terms, namely; to match supply and demand. And because fruits and vegetables are perishable and typically cannot be stored over longer periods of time (with the odd execption or two) , produce sellers and produce buyers had to come together several times a week to re-match supply and demand. All of which made the auction business a relatively straight forward one to be in. For his efforts in bringing sellers and buyers together, the auctioneer was paid a fee, tyically 10% of the purchase price.
Produce Auctions worked well for a long time but when our buying and selling behaviours changed, auctions struggled to adapt to the new conditions. Many economists still view auctions as the purest mechanism to establish the right price for a product on any given day - and they are probably right. The trouble is that the behaviour and structures of the produce markets coupled with the auction process had lost their appeal to corporate buyers who were growing in size and thus increasing their leverage. Smaller growers, however, still see some benefit in selling their produce through auctions.
Buyer and Seller
The Middle Man