Producer

by Stephan Smith on January 24, 2011

Are you familiar with the term “producer”? Have you heard or read things like, “Producers are making record profits.” or “Producers aren’t happy with the slow shopping trend.” or anything like that? If you have, it doesn’t surprise me because the term “producer” is used all the time in news articles, mentioned on television and on the radio…everywhere. If you aren’t sure what a producer is and you would like find out, then I suggest that you read this page because on this page is where I will explain what a producer is.

What is a Producer

A producer is an entity, like an individual or business, that creates goods and or services and makes it available to an economy for consumption by consumers. A producer is the exact opposite of a consumer, for a consumer uses up (or destroys through consumption) goods and services and a producer creates goods and services. That’s all a producer is. Easy to understand, right?

In my article explaining what a consumer is, I stated that most individuals and businesses are consumers (99.99% of individuals and businesses are consumers). It would be a safe to say that most individuals consume some amount of goods and services offered in an economy. But there are significantly fewer individuals who are producers, for not all individuals create goods or provide services and make them available for consumption in an economy.

Individuals who would not be considered producers would have to be unemployed (that includes not being self employed) and would have to not be creating a good or providing a service for consumption in an economy. Individuals who are not employed, not independently contracted, not creating goods or sharing their skills (which is a service) are not producers, for such an individual isn’t providing a good or a service and making it available for consumption in an economy. An employed individual, an independent contractor or anyone who offers one’s skill, creating a good and make it available for consumption in an economy is a producer.

An example of an individual who is not a producer would be a currency trader who trades currencies for oneself in an effort to profit for oneself. Such a profession doesn’t provide a good or a service to anyone (consumers) in an economy besides oneself. I do not consider that a producer.

However, if a currency trader who trades currencies in an effort to profit for the sake other individuals and businesses, then that individual is indeed providing a service for consumers in an economy and as a result is a producer. Do you follow? A currency trader would be a producer in this example because one is providing skills, which is a service, and making those skills available for consumption in an economy. The same concept applies for car washes, hair salons, commercial banks, internet service provides, etc.

Regarding businesses, I believe that most business entities are consumers and producers, for most businesses consume the skills of the employees and or independent contractors it hires and most businesses create a good or a service (or both).



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