Who decides prices at market place?

Is it customers?

No, they really don’t care about that until they face their needs and approach the market.

Products producers?

Most people assume so, but No, they price based on what market want, otherwise they can’t sell.

So it’s Government?

No, they have tried several times and fail catastrophic.

(monitoring of sugar prices and cashew nuts trade are some of perfect case studies of how challenging is it to interfere with established trade structure)

If all these major players don’t decide the price, then who does โ‰

With similar struggle early economist proposed a Theorem of Supply โคต and Demand โคด. In simple terms; prices at markets will balance at the point, when the Supply and Demand side will agree, what makes sense to them.

Up to this point the concept of supply and demand is still not clear, and as the matter of fact when most us read those simple laws or concepts we picture some of our dummy experts who spent their lifetime making simple things complicated for reasons I term as, nonsense reasons.

Now let’s ignore them and do things our way,

Let us explain and validate what happen to agriculture sector by SUPPLY AND DEMAND concepts,

Remember, this is our way!!!

๐Ÿ…๐Ÿ†๐Ÿฅ‘๐Ÿ๐Ÿ‰๐ŸŠ๐Ÿ‹๐ŸŒ …

1. In agriculture, production without preservation is the losers game. โฌ‡ With regards to supply and demand law, price and profitability of crops isn’t defined by how much you have harvested, but how long you can tolerate chaos of market until prices favors you.

2. Therefore, investing in preservation facilities is more reasonable and convenient way than actual farming. This doesn’t mean normal farming is bad, but farming without risk management plan, can never be profitable in long run.

3. Banks understand the game of demand and supply, in that manner they will never credit a loan base on productivity, records. No matter how quality you term your farm products, they will term them just as liquid assets, because no one has the full control of market forces.

4. When prices go South, even Government can’t save you, really? Why?!! If they will assign higher prices, traders and storekeepers will prefer other crops and If they will purchase them they still have to create a channel of demand which doesn’t exist. (Remember Koro-Show) So, the odds are out of their side too.

5. The moment a product/service has become popular and seems profitable in market is the right time to stay out of it, (we all know ‘story za matikiti,mananasi na vitunguu’ ) in most of our markets it’s a good indicator of Over Supply about to happen. And people will face drastic losses. Just give them time and observe.

However, when people face deadly loss and loose appetite of production in certain basic crops or product or service, is the right time to move in. Because, the suppliers have control and prices will stay stable for a while.

6. Truth you personally extract from market is more valuable than financial news from media and training. These news creates a bias in markets either on demand or supply side and frequently cause flipping of market other way around.

7. … remember I’m not your lecturer or guru so mind your own business and make sense of what surrounds you.

Finally, if the concept of how stable is supply and demand will be applied to your business analysis, can make a huge difference. But it’s your choice to apply.

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