Two groups of peasants sit in the ruins of a Caucasian village along with a delegate from the State Reconstruction Commission. It is shortly after WW II. The peasant group on the right originally owned the valley and herded goats there, and now that war is over they want to return to their valley. The peasant group on the left is a group of fruit farmers from another valley but hopes to take over this valley in order to plant fruit trees. The Delegate agrees to listen to both groups' arguments as to why they should take over the valley.
The peasants on the right unpack some cheese and argue that the taste is different since they had to leave their original valley. They also claim the land as a matter of law, arguing that since they have always been in this valley they have a right to reclaim it.
The group on the left speaks next. They have Kato, an agriculturist, explain that they have drawn up irrigation plans that would allow them to produce ten times as much fruit as before the war. He shows the other group the plans and explains that it would even convert 700 acres of infertile land into fertile land. Everyone looks at the plans and exclaims how good they are. The delegate asks the peasants on the right if they will give up the valley, and they agree.
In order to celebrate the peaceful resolution to the problem, the peasants on the left provide a singer named Arkadi. He agrees to sing a song called the Chalk Circle which comes from the Chinese. Everyone goes into the Club House to eat and be merry and to listen to the Singer.
This short parable that opens the play also sets up the structure of the play. There are two disputing parties, the goat-herders and the fruit farmers. Each group wants to claim the valley. However, the goat-herders have the claim that they were there first and should therefore keep the land, whereas the fruit farmers argue that they could put the land to better use. The Delegate moderating the debate chooses the fruit farmers because it is more logical for the person who can put the land to better use to get it.
This entire prologue is extremely Communist in its message. Any capitalist society would argue that whoever originally owned the land should get it. Brecht instead argues that whoever can best use the land should get it. It is because of the Communist overtones in the prologue that Brecht originally did not allow the prologue to be printed while he was living in the United States.
The prologue serves yet a third function of allowing Brecht to present his ideas before the play even starts. This is extremely clever of him because the audience receives the moral of the play without even having to watch it. Thus, he gets his Communist message across immediately and only after he has presented the message does he actually allow the play to begin.