Chapter 38: Saving Money by Cutting Out the Middleman

The ledgers for the pharmaceutical factory, piled high since early spring, sat in a thick stack on the wooden desk before Lu Yuxuan. He leaned over the desk, clutching a pencil, his brows furrowed as he calculated—raw material costs had risen another 5% since last month. For honeysuckle alone, the price had climbed 20 cents per jin compared to the start of the year.

"Mother, look at this," Lu Yuxuan said, handing over the ledger and pointing to a page. "We buy honeysuckle from middlemen at 1.5 yuan per jin; but I heard Grandpa Li say he only sells it to them for 1.2 yuan. There’s a 30-cent difference right there."

Su Yao took the ledger and flipped through it; it was indeed true. Since spring, all raw materials had been sourced through middlemen, and common herbs like honeysuckle and isatis root were significantly more expensive per jin than what the farmers received. She had been so preoccupied with production and quality control that she hadn't scrutinized the procurement process, never imagining the markup would be so steep.

"Is Grandpa Li a medicinal herb grower?" Su Yao asked.

"Yes, his family lives in Li Village, on the other side of the mountain. They grow over ten mu of honeysuckle," Lu Yuxuan replied. "Yesterday, when I went to the supply and marketing cooperative, I heard him complaining to Director Wang that the middlemen were driving prices down so hard that he couldn't make a profit on this year's harvest, and he didn't even want to plant next year."

A thought struck Su Yao—if they bought directly from the farmers, it would lower the factory's costs, allow the farmers to earn more, and ensure the quality of the herbs. It was a triple win. "Yuxuan, do you want to come with me to Li Village to talk to Grandpa Li?"

"I do!" Lu Yuxuan’s eyes lit up. He immediately put away his pencil and ledger. "I can help you record prices and calculate the differences."

Early the next morning, Su Yao and Lu Yuxuan set out. Li Village was tucked away in a mountain hollow, over ten miles from the commune, and it took them nearly two hours to arrive. Upon entering the village, they saw several farmers carrying bamboo baskets heading out, the baskets filled with fresh honeysuckle, the petals still glistening with dew.

"Grandpa Li!" Lu Yuxuan recognized him immediately and ran over.

When Grandpa Li saw them, he paused, then smiled. "Yuxuan, Comrade Su, what brings you here? Come inside and sit."

Grandpa Li’s home was a simple adobe house. In the courtyard, freshly picked honeysuckle was drying, a sea of golden yellow. He ushered them inside and poured them bowls of coarse tea. "Are you here to buy herbs?"

"Yes, Grandpa Li," Su Yao nodded. "We want to discuss whether we can buy honeysuckle directly from you and the other farmers in the village. We’ll pay a higher price than the middlemen."

Grandpa Li hesitated, then sighed. "Comrade Su, it’s not that I don’t want to sell to you, but the middlemen have blocked our path! They say if we don't sell to them, no one will dare buy from us, and the herbs will just rot in our hands."

"How much do they pay you per jin?" Su Yao asked.

"1.2 yuan," Grandpa Li said. "If the quality isn't perfect, they drive the price down even further; sometimes we can't even get 1 yuan. Then they turn around and sell it to you for 1.5 yuan. They make 30 cents in the middle, which is easier than growing the herbs themselves."

Lu Yuxuan, who was taking notes, heard "1.2 yuan" and "1.5 yuan" and immediately started calculating. "Mother, if we buy at 1.2 yuan, we save 30 cents per jin. We use 1,000 jin of honeysuckle a month, so that’s a savings of 300 yuan—enough to buy a lot of things."

Su Yao nodded and said to Grandpa Li, "Grandpa Li, we will buy at 1.2 yuan per jin. For top-grade quality, we pay 1.2 yuan; for second-grade with minor insect holes, we pay 1 yuan per jin—both higher than what the middlemen offer. Plus, we settle accounts monthly and never default. What do you think?"

Grandpa Li’s eyes widened, barely able to believe it. "Really? 1.2 yuan a jin? And monthly settlements?"

"Really." Su Yao brought out the agreement she had prepared in advance. "We can sign an agreement with the prices and quality standards clearly written out. From now on, you and the other farmers can deliver the herbs directly to the factory, skipping the middlemen."

Grandpa Li took the agreement and read it for a long time, his hands trembling slightly. "If that’s the case, we’d certainly be willing to sell! I’ll go call the other growers right now and tell them."

Before long, Grandpa Li had gathered all the herb growers in the village; the courtyard was packed. Su Yao explained the standards and prices to everyone and read the agreement aloud.

"Comrade Su, what exactly is the standard for top-grade?" one farmer asked.

"Top-grade means no insect holes, complete petals, and a golden yellow color; second-grade means a few minor holes or slightly broken petals, but the medicinal efficacy remains the same," Su Yao explained. "We’ll post these standards at the factory’s intake point so everyone can see them clearly when they deliver, ensuring no one can unfairly drive down prices."

"If we bring only top-grade, will you take it all?" another farmer asked.

"Yes! As long as it meets the standard, we will take all of it," Su Yao said. "From now on, the factory will source all raw materials from your villages, ensuring you have a steady place to sell your crops and get a fair price."

The farmers were overjoyed. They had been harboring resentment over the middlemen’s exploitation, and the prospect of selling directly to the factory for more money was a dream come true. Grandpa Li signed the agreement first, followed by the others. Soon, they had signed on five villages, covering Li Village, Wang Village, Zhaojiagou, and other major herb-growing areas.

After signing, Grandpa Li insisted they stay for a meal. It was just corn porridge, pickled vegetables, and flatbread, but Su Yao ate with gusto. During the meal, Grandpa Li said, "Comrade Su, you are a truly good person. The middlemen always told us our herbs were poor to force prices down. Now that we have standards, we know how to pick and select them properly, and we will definitely be able to produce even more top-grade quality in the future."

Lu Yuxuan chimed in, "Grandpa Li, we’ll come to the village every month to check in. If everyone needs fertilizer or farm tools, we can help find a way."

Grandpa Li was deeply moved. "Thank you so much! We will work hard to grow good herbs—no mixing, no cutting corners—we guarantee you’ll get the best."

Back at the factory, Su Yao immediately had Xiao Zhang find a wooden board and paint the quality standards on it in red, hanging it on the wall of the intake point: "Top-grade honeysuckle: no insect holes, complete petals, golden yellow, 1.2 yuan/jin; Second-grade: minor holes, slightly broken petals, 1 yuan/jin; Isatis root: thick roots, white cross-section, no mold, 1.1 yuan/jin..."

They also hung a fair scale at the intake point and kept a small ledger to record daily intake and prices, so the farmers could see for themselves and be at ease.

A few days later, the farmers began delivering their harvest. Grandpa Li was the first, arriving with a bamboo basket full of top-grade honeysuckle, the golden petals shimmering in the sun. Xiao Zhang carefully inspected them against the standards. "Grandpa Li, these are all top-grade. 1.2 yuan per jin, 50 jin total—that’s 60 yuan."

Grandpa Li counted the money over and over, his face beaming. "I used to sell 50 jin to the middlemen for 60 yuan total. Now, for the same amount, I earn 15 yuan more—enough to buy two notebooks for my grandson."

Other farmers followed suit, and the intake point became a bustling hub. One farmer delivered 100 jin of top-grade honeysuckle and received 120 yuan. "Comrade Su," he said happily, "we never have to endure the middlemen’s attitudes again. This money feels well-earned!"

Lu Yuxuan went to the intake point every day to help with the books, recording quantities and prices, chatting with the farmers about their harvests and difficulties. Once, he noticed a farmer had mixed a few leaves into his honeysuckle and whispered, "Grandpa Wang, there are some leaves in here. If you pick them out, this will be top-grade, and you can earn 20 cents more per jin."

Grandpa Wang smiled sheepishly. "Oh, my eyes aren't what they used to be, and I didn't pick them clean. I’ll go back and do it now."

Lu Yuxuan said, "It’s okay, take your time, we’ll wait for you. If you ever find it hard to pick them yourself in the future, we can send someone to help."

Grandpa Wang felt a warmth in his heart. When he returned, he not only cleaned the honeysuckle but also sorted through his other herbs, never cutting corners again.

As the direct-supply model progressed, the factory’s raw material costs dropped significantly. Saving 30 cents per jin on 1,000 jin of honeysuckle a month meant 300 yuan in savings—3,600 yuan a year—which was no small sum. Su Yao used the savings to upgrade equipment and give employees raises, boosting morale further.

When Lu Zhanye returned and heard about the direct-supply initiative, he smiled and said, "Yuxuan really has a talent for business. He’ll be a great help to you in the future."

Su Yao nodded. "He does. The boy is thoughtful and good with numbers. With his help, I feel much lighter."

Lu Yuxuan overheard and smiled shyly. "Mother, I just want to help you save money and make the factory better so everyone can live well."

Su Yao patted his head, her heart full of contentment. She knew the factory's success wasn't due to her efforts alone—it was thanks to Lu Zhanye’s understanding, the children's help, and the villagers' trust. As long as everyone worked together, the factory would only thrive, and the lives of the villagers would grow increasingly prosperous.

As the sun set, the factory’s intake point was still lit. A few farmers were busy delivering herbs, Xiao Zhang was busy weighing and recording, and Lu Yuxuan was helping out, occasionally handing a cup of water to a farmer. Su Yao stood at the doorway, watching the scene, feeling deeply at peace. The direct supply had not only saved the factory money but had brought them closer to the villagers, uniting their hearts. That unity was more precious than anything else—it was her most reliable foundation.