Agriculture Reference
In-Depth Information
It seems obvious that commercial farmers must have access to a market to sell their
products. In many parts of the world this critical factor is lacking. The small fruit stand
by the road shown in Figure 11.4 is a market, but not an important one for most farmers.
Fruit farmers need a guaranteed buyer for their produce at the time of harvest. The fruit
shown in Figure 11.4 cannot be stored until a buyer is found. It must be sold when ripe
or left to rot in the field. Even dry grains, such as wheat, cannot be stored for long
periods due to damage by mold and insects. If the farmer has taken out a loan to
produce the crop, the production must be sold to repay the loan. Any delays incur
mounting interest costs. Farmers must be able to sell their production at harvest at a
fair and profitable price.
To be an important outlet for farm products, a market must provide price infor-
mation to farmers. This price information should be freely available by newspaper or
radio for several purchasing points in a region. When price information is available,
farmers are able to move their products toward the better paying market and help main-
tain the stability of prices. In some markets controlled by a few large buyers, the spread
of price information is actively discouraged since this will enable other buyers to pay
more and draw farmer production to them. These large monopolies depend on interme-
diaries or farmers bringing products to the warehouse and accepting the price offered. If
the sellers have knowledge beforehand of prices, they can simply change their route to
the best paying buyer.
Even in the open economy of United States, markets restrict or encourage what
farmers can produce and sell. When a farmer grows a bumper crop of sorghum, a
buyer is needed to convert the grain into money. Grain markets in the United States
are limited by the size of railroad grain cars and storage facilities. A single grain car
Figure
11.4.
Typical small fruit market in Ecuador.