Price fluctuations in farming
Michael J. Ssali
The aim of every farmer should be to maximize profits by selling farm products at the best prices. The farmer must however constantly be on the lookout because like in any other business the principle of supply and demand is supreme.
It is no use raising the prices of a commodity such as eggs when there are other farmers producing eggs and selling them at low prices.
A farmer can increase profits without raising the sale price of his products if there is a way he can get inputs such as feeds or fertilizers cheaply.
Sometimes reducing prices and earning less from each product unit attracts many more customers and the farmer may end up earning a lot more than he would earn by raising prices and getting fewer buyers.
Some farmers choose to produce crops during times of scarcity. This normally means working hard to produce a commodity like fresh beans when hardly any other farmer in the neighborhood has them.
Producing them could mean planting during the dry seasons and carrying out irrigation. This gives the farmer the freedom to set a higher price than he would if he had competitors.
Farming has its risks like all other businesses. If the weather is favourable and all other factors go well the harvest will be plentiful in nearly every household, which then means the buyers of the crops could be fewer at the individual farms since there will be so many alternative sellers, resulting in price reductions and less profits for the farmers.
On the other hand drought, hail stone, or pest infestation may damage a crop rendering it hard for the farmer to sell the products at the prices he would have wanted.
It pays to set up good production standards like observing proper hygiene and marketing clean and attractive farmed commodities. Some people will pay any price for clean fruits and vegetables that carry no traces of dirt or pesticide contamination. Farmers should endeavor to have cooling facilities to safeguard perishable farm products like fruits, vegetables, and milk so that they don’t sell them at giveaway prices for fear of losing them.
