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Russian: Бартер


General Provisions

This word, the “barter” was perhaps the most popular in the first years of the post-communism Russian life. Under conditions of severe or even hyperinflation the domestic barter transactions were very popular if not the most popular transactions in Russia. Indeed, the most simple and, definitely, old of countertrade arrangements is barter which is often regarded as an old-fashioned means of exchange that was superseded because money is far more efficient [1]. After all, in a monetary system an apple grower who needs shoes simply has to find a cobbler. In a pure barter system the apple grower would have to find not just any cobbler but one who happened to want apples at that time. Thus in virtually all civilizations, except the Incas, money came to play an important role.

Barter is the direct exchange of goods and/or services between two parties without a cash transaction (Fig. 1). Although barter is the simplest arrangement, it is not common. Its problems are twofold. First, if goods are not exchanged simultaneously, one party ends up financing the other for a period. Second, firms engaged in barter run the risk of having to accept goods they do not want, cannot use, or have difficulty reselling at a reasonable price. For these reasons, barter is viewed as the most restrictive countertrade arrangement. It is primarily used for onetime only deals in transactions with trading partners who are not creditworthy or trustworthy.

There are two ways to make barter easier. The first is financial one where they have to use funds to make a final settlement (Fig. 2). The second is technological one. In the frame of information society barter becomes more feasible because the computer can certainly search more effectively the exchanging pairs for barter deals. It is worth noting however, that some of these computerized barter schemes do use units of account to facilitate comparison of the values of the goods and services offered and therefore in such cases the barter circles are using a form of money, albeit one with very restricted functions. Therefore, an Internet bartering has to have good perspectives[2].

Basic Schemes of Barter Arrangements[3]

Barter E.jpeg

Advantages and Disadvantages of Using Barter Arrangements [4] [5][6]

Subject of Advantages of Using Barter Arrangements Comments on Advantages of Using Barter Arrangements Subject of Disadvantages of Using Barter Arrangements Disadvantages of Using Barter Arrangements

Barter can help business weather economic storms

  • In terms of financial hardships business can barter their services to get what they want. Barter trade has developed into a sophisticated tool that can sometimes help business increase their efficiency by monetizing their unused capacities and excess inventories. Barter usually replaces money as the method of exchange in times of monetary crisis, such as when currency may either be unstable (e.g. hyperinflation or deflationary).

Lack of Double Coincidence of Wants:

  • In order for act of barter to take place, it is necessary that the persons with matching requirements are brought together. If a person A wants what person B has, person B must also want what person A has. This is called the double coincidence of wants, which, as we can see, is very rare to obtain in real life. This difficulty makes barter system very cumbersome, even sometimes impossible, especially in an economy where specialization has taken place;

Save Cash

  • Members spend barter dollars on things they normally have spent cash on .Members earn barter dollars selling their own product or services. These markets or swops meet without money.

Lack of any Common Unit of Measurement of Value

  • Once the persons wanting each other’s commodity come together, the next problem is to determine the rate at which the exchange will occur. If A has rice, and B has wheat, then how much of rice will exchange for how much of wheat? Even when we have determined such a rate of exchange between the two given commodities, the problem still remains as to how to determine the rates of exchange between all the various commodities which are available in the barter economy. In case there are 500 different goods and services, we will have to work out 1,24,750 possible ratios of exchange which is an enormously difficult task. Not only this, we will have to adjust these ratios with each other in order to avoid unique profiteering by some traders. All the problems add to the difficulties of the barter system;

Makes business recession proof

  • During times when the economy slows down many people still have products or services which they can trade. If business join a barter exchange then they can continue to buy and sell without the need for cash. The barter business increases during recession and is one of the few recession-proof business around.

Lack of Means of Sub-division

  • There are manly kinds of goods (like a TV-set, a house, a car etc.) which, when divided, lose their worth. In other words, they are indivisible. In the case of such goods the system of barter fails. If one TV-set is exchanged for 2 measures of rice, then to say that half a shirt will exchange for 1 measure of rice has no meaning;

Earn extra money

  • Business sells their unsold stock, slow moving or perishable items or unsold items to other barter exchange members. They then use those barter dollars to purchase the goods and services they need or want .This increases their wealth. Business with time on their hands or product on their shelves can sell this to earn barter dollars and reduce their cash cost.

Lack of any Common Unit in terms of which Contracts and Agreements requiring Future Payments would be written

  • In a system of barter economy, another set of difficulties arises when one of the commodities (to be exchanged) is not parted with immediately, and requires to be given away at some future date. In such a case, there is no way in which we can write a contract, or have an agreement to effect this transaction;

Reduce bad debts

  • A barter exchange member can take products or services from a customer of that business that is defaulting on payment. The barter exchange member can then sell that product or service to other barter exchange members for barter dollars. Rather than chasing after your customer that cannot pay you, get goods or services from him and sell them for barter credits.

Lack of any Common Unit in terms of which the Generalized Purchasing Power could be stored

  • An individual’s income is not always spent, and is sometimes set aside for future use. In a system of barter economy, there is no way of storing the purchasing power of the saved income.The money system does not have any of the above problems, and hence it is said that money is the most preferred asset, and money system is the most preferred system for an economy to go ahead.


  • Barter exchange members are part of a closed group of businesses. Once a business joins barter exchange they spend and earn barter dollars with other people who are members. Business owners become loyal to the group and always look to purchase from other members in the group, and other members will always come to purchase from them.

Possible Losses of Perishable Products

  • Some barter items cannot be saved for the long term. One of the primary functions of money is to act as a store of value. You can’t keep your fresh eggs to trade next season, or save rice for your retirement

New business

  • In an exchange, members get to know each other either by working with each other or by reputation being in a small group. Trust is developed and members refer each other to cash consumers outside the group

Great difference in times of delivery for items involved in exchange.

  • Involving into exchange the items with enormous difference in volumes necessary to be changed. The party with an expensive item has a risk to be not compensated due to drastic changes in the marketing environment of the country with a cheap item to be exchanged for multiple deliveries; e.g., expensive equipment and timber or ore.

Barter financing

  • Each member of barter exchange should be given small line of credit. They can use these barter dollars to buy goods or services from any other member. They repay these barter dollars by people purchasing their goods and services. As the exchange, we will be responsible for bringing those members new customers to repay that loan. As the barter exchange we can help a member businesses repay their lines of credit by promoting those members within the exchange and bringing on new members that would want the goods or services of the member who is negative.

Price fluctuations on the world market

  • Difficulties of long negotiations followed by abrupt price fluctuations on the world market; e.g., impact of political events on prices for oil and oil products.

Examples of Barter Arrangements

Bulgaria - Russia [7] Under a 1998 barter arrangement, Bulgaria receives gas from Russian Gazprom in return for allowing transit through its territory to a number of other countries including Turkey, Greece, and Macedonia. The barter agreement has been extended 10 years. Bulgaria will be provided gas at a fixed price, which after the latest hikes in fuel is among the lowest in Europe.

Brazilia - South Korea [8] The Brazilian government has suggested a barter deal to South Korean major shipbuilders and the state-run oil developer KNOC (Korea National Oil Corp). The arrangement essentially has Korea, the world largest shipbuilders, providing Brazil with drill ships or floating production, storage, and offloading platforms in return for stakes in its oil fields in the Santos area, which KNOC would manage.

Democratic Republic of Congo - China [9] The Democratic Republic of Congo is trading with a massive state-owned firm based in Beijing, the China Railway Engineering Corporation (CREC). They are planning a new road which will be the first endeavor of the biggest single deal China ever done in Africa, worth $9 billion. Due to be signed in Beijing shortly, it gives DR Congo $6 billion of desperately needed infrastructure about 2,400 miles of road, 2,000 miles of railway, 32 hospitals, 145 health centers, and two universities. In return, China gets a slice of DR Congo precious natural resources to feed its booming industries 10 million tons of copper and 400,000 tons of cobalt. It is a barter deal, what the Chinese side loves to call win-win. Not aid with strings attached, like Western powers have given DR Congo over the years, but pure business. When production begins, the Chinese companies signing the deal, CREC and Sinohydro, will disburse a final $3 billion on roads, railways and hospitals. The idea is that China will recoup its total investment within 10 years.


  1. Barter – Relevance and Relation to Money: Is barter still relevant in the modern world? //
  2. Al-Tayar, B., Vukovic, J., Herera, F., Tchybysheva, E. Mechanics of Modern Barter forSMEs -
  3. Cola for Vodka -
  4. Benefits Of Barter Exchange - Land Fortune Commodity Exchange -
  5. The barter system: Pros and cons - MeriNews -
  6. The Pros and Cons of Bartering for Survival - The Survevalist - September 04, 2013 -
  7. Unusual Barter Agreement Struck Between Russia & Bulgaria - -
  8. Barter On The Big Stage - Ships For Oil - BarterNews –
  9. $9 Billion Barter Deal - BarterNews –
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