Eco 581 - Supply and Demand of Vegetables

Supply and demand of Vegetables

Kehao Wang

Keiser University

Dr. Sol Drescher

ECO 581

Nov. 14. 2015

Introduction

Fluctuations in market prices, including fluctuations in the price of vegetables market. These price fluctuations not only involved farmers, but also to consumers. So the relationship between supply and demand will be affected.

The United States fruit and vegetable distributors to implement the traditional sales principles and retailers are rapidly changing for more and more Americans to focus on the added value, so that the quality of agricultural products purchase decisions. Because of the easy metamorphism and shelf life is very short, these projects need to transport facilities, to meet customers in the fresh. This requires a lot of effort to the parties concerned. The whole chain is full of problems, such as the lack of transparency in pricing (on the side of the farmer), the dominant position of the traders in the supply chain is weak link, etc.. This has resulted in the loss of the farmers' income, an increase in additional costs for other supply chain partners, and ultimately consumers ultimately bear the extra burden of his pocket. As the organization's retail industry has begun to emerge in the interest of fresh fruit and vegetable markets, and has entered a huge investment in the market, supply chain has been a huge change, not only affects the supply chain partners, but also to the United States across the agricultural sector.

How do price changes affect supply?

Increase in price causes an increase in quantity. Change in quantity supplied due to change in its own price.

[pic 1]

        This figure is “Increase in Price causes increase in quantity supplied’. Because increase price, the supplies want get more profit, so increase quantity. Oppositely, Decrease in Price causes decrease in quantity supplied.

[pic 2]

The main causes of short-term price changes of fresh produce are:

1. The amount of produce on sale in the market on a particular day and the quantities sold in the previous few days.

2. Short-term demand changes (e.g. holidays and festivals).

3. The effect on demand of prices of competing products.

To make full use of this opportunity, the close communication between the high supplier and the market price, and be able to quickly deliver the product.

How do price changes affect demand?

        When prices fall, consumers increase their purchases. When they buy the price. However, the impact depends on the type of product change. For example, to increase the daily staple food to eat, such as corn, rice, potatoes and green banana prices, sales have been relatively small, because people still want to eat. Similarly, prices will not lead to a significant increase in consumer spending. This is not a luxury or non essential food, such as oranges and apples. The price of a small waterfall may result in a huge share of sales growth, while small price increases will lead to a sharp decline in sales revenue. 

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