Hoarding and storage for off-season
sale
Q255 :When a certain commodity is in season, it is
available in large quantities and at cheap prices. Later, when the
supply decreases, the price increases. This is normally a gradual
process. Some businessmen buy large quantities of crops and commodities
when they are in high season and store them in order to sell them when
the commodities are in short supply. In this way, they make better
profits. Is this acceptable or does it come under hoarding?
A255 : We have to differentiate between monopoly
and a good sense of business. It is a wise businessman who buys his
supply of goods in season when the prices are down. If he stores them
for a period of time and manages to keep them in good condition, he is
able to make good profit when he releases his stock when the commodity
is out of season. In this way, he makes a good use of the relationship
between supply and demand. If such a businessman plays fair, there is
nothing wrong with his practice. The profits he makes are legitimate.
But I must emphasize the aspect of fairness in this game, because it is
a very important aspect. The businessman must be fair to his fellow
businessmen and to the consumers. Perhaps the best way to illustrate
the aspect of fairness is to explain what is unfair. This is normally
known as hoarding or monopoly. Sometimes a businessman or a group of
businessmen buys a certain commodity in large quantities. The supply
becomes short in relation to the demand. Therefore, the price goes up.
Neither the short supply nor the higher price is natural. Both have
been artificially created by hoarding. It is only because the commodity
has been withdrawn from the market that the prices go up. This is the
very purpose of those businessmen who combined efforts and bought the
commodity. Their only interest is their own profit. Their practice is
undoubtedly forbidden. It may be suggested that in both cases
businessmen have bought large quantities of a certain commodity. What
makes the first practice legitimate while the other is forbidden? The
answer is that in the second case, the whole process is artificial. In
the first one, it is natural. In order to differentiate one from the
other an important condition must be met. That is, the commodity
itself must remain in good supply in the market throughout the period
between buying it at cheap prices in season and releasing it later.When
the commodity is not available, the businessmen who bought it in season
must release it. Otherwise, they become hoarders and their practice is
no longer legitimate. The difference between the two situations is very
simple. Every businessman must understand this and should be careful
lest he steps over the boundaries of legitimate practices.
Our Dialogue ( Source : Arab News - Jeddah )