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1.Land, Labour, Capital and Management:
Production requires all the factors of production. To cultivate agricultural products, land and labour are needed. But production also often requires money, even it is only used for seed or tools. And management capacity will often determine the scale of production.
2.Season:
Farmers in the agricultural sector are dependant on the seasons. The supply of agricultural products varies, therefore, from season to season. During the harvest season, the supply of agricultural products is high, while at other times in the year the supply is low. The abundant supply forces the prices down in that season. A low supply at other times can lead to high prices for such products. Farmers/agribusinesses can earn a lot of money if they can manage to offer products for sale when the supply of those products is low.
3.Weather:
Agricultural production also depends on the weather. If the weather is good, the harvest will be plentiful and the supply of agricultural products will be high. If the weather is bad, the harvest will be poor and the supply will be low. An abundant harvest therefore often leads to low prices, and a poor harvest often causes the prices to increase.
Number of farmers: Supply is also determined by the number of farmers of a particular product and the quantity that they produce. Farmers often choose to produce a product that is currently selling for a high price. This means that a period of high prices is often followed by a period with an increasing supply, as more and more farmers choose to produce that product. When the supply becomes high enough, the prices will fall. If the price stays low for an extended period, supply will often decrease again as farmers switch to products with which they can earn more money. The result is a smaller
supply and, again, higher prices for the product.
4.Import:
Not only local production, but also production in a nearby area or a different country can affect the quantity of the supply. Particularly when the price is high, middlemen will try to buy products elsewhere and sell them on the local market.
Price: Supply is also ultimately influenced by price. When the price for a particular product is high, farmers will work harder to put that product on the market. The supply will therefore increase. When the price is low, farmers will not work as hard for that product and the supply will decline.
marto answered the question on March 14, 2019 at 06:03