Macroeconomics Price Ceilings/Price Floors/Taxes

The weather has an impact on the procurement of grains and makes it very volatile.  In 1990 a poor harvest contributed to low inventories and sales volume.   Willis

1 Farmers may not totally understand the product value. They may not easily accept new product that they have never heard about.

subsidies; which are grants of money that are given to the Canadian agricultural markets and

This article written in the Texas Agriculture, a magazine published by the Texas Farm Bureau, is about all the factors impacting farmers that effect their income. Over the past couple years, a combination of things has caused the average Texas farmers income to drop. The primary audience for this article is the farmers in Texas as they are experiencing these issues first hand. The secondary audience would be consumers who have noticed price fluctuations in products at the store and are wondering the reason.

There is a market trend of supply and demand in an economy and this is measured through the equilibrium process and the actors that affect supply and demand. The farmers are the market suppliers and hence they determine their produce by measuring the equilibrium market prices and quantities. The suppliers are aware that when the prices of commodity increases the demand of the same commodity decrease and when demand increases supply decreases until the market reaches an equilibrium point. There are various factors that affect

The rising costs of land and the simultaneous costs of water make it so 30% of farm households have negative income. The cost of sustainability, such a new tilling methods and access to water, also strains farms. This often leads to farmers self-exploiting themselves to try to generate the most crops possible and cultivate their land to the fullest extent.

thing, but this was bad for the farmer, lower prices meant that the farmer had to grow enormous

Alongside the growth of large farms, crops are being subsidized which leads to the prices of the goods being kept at a low price (Toews). For a family farm, this means producing a crop that is not cost effective which eventually drives the family farms out of business. Once these large corporations produce the crop, it is then shipped to the manufacturers

“Economists at the University of California, Davis said that agriculture, once a $44 billion annual business in California, will suffer a financial hit of $2.2 billion due to revenue losses and higher water costs” (Associated Press, 2014). Many farmers are going out of business because the production costs have increased with rising inflation, while revenue has decreased. Others have reduced their farmland plantations which decreases the crop production. Some of the affected crops include oranges, pistachios and rice. One example of how this affects the nation is the California almonds. “California [is] the source of eighty percent of the world’s almonds” (Bloomberg, 2014). This year farmers had to come up with new tactics to rescue the nut from drought “by diverting the water used for vegetables and drilling more water wells to keep the trees hydrated” (Bloomberg, 2014). Farmers are not the only group of workers affected by the drought.

The demand for corn has greatly increased because of its many new found uses but mainly because it has been discovered that corn can be use as an alternate energy source. This great demand for corn has increased many area of farming and production of corn here and other countries such as Mexico and South America. This great demand has lead to an increase in farmers who are willing to cash in on these cash crops and try to earn a few quick dollars because of the great demand for it. In 2007 Corn farmer saw record profits because famer where getting twice as much for corn as they did in previous years. The same trend continued but farmers dealt with so many obstacle such as weather, bugs and lack of

The capability to withstand water shortages and the havoc caused by the harvest passes makes the plants to mature early with its productivity level being high. Regions suffering from food shortages can only undergo starvation for short period before it can start to enjoy the food. On the other hand, the abovementioned advantages make farmers engage in profitable farming business with the low level of costs of farm inputs and high outputs. This aspect benefits not only the farmers but also the population that stands to enjoy a large variety of food stuff at their disposal.

As a farmer you need to watch the changing prices for the products. They use different actions to keep themselves safe from unpredictable changes in the markets. Farmers also track disease and weather conditions closely, because disease and bad weather may have a bad blow on crops or animal health. When farmers plan ahead they may be able to store their crops or keep their animals to take

For example, in 2008 Kenyan farmers were hit very hard due to the financial crisis and post election violence (Anon, 2010). The number of people who wanted horticultural products fell dramatically and the total

The price ceiling is an artificially maximum set price that vendors are legally allowed to charge up to for a good or service as mandated by the government. There are two possible outcomes from a government imposing a price ceiling. The first would be for the government to set the price above the equilibrium price. This does not create any true negative problems on the economy as it still allows the free market and capitalism’s invisible hand to set the equilibrium price and negotiate prices between firms and consumers. This phenomenon is known as a non binding price ceiling. Non binding price ceilings are rarely used by governments imposing price ceilings. Most governments impose their price ceilings below the equilibrium line, which is also known as a binding price ceiling.

1. Not all policies are efficient – i.e. Common Agricultural Policy resulted in oversupply and higher prices of