Dl4-Uncaster Fanning Saturday, March 26, 1988
(Continued from Page Dl2)
of running out, and this abnormal
level of buying drove prices even
higher creating more and more fear
among consumers. All needs or
necessities have one economic
trait in common. Because they are
necessities, consumers will bid
against each other to ensure that
they get their individual supplies.
A small reduction in supply, even a
perceived one, will drive prices up
very strongly.
In this country, the shoe is on the
other foot most of the time. There
aren’t any perceived shortages,
and customers don’t work them
selves into bidding frenzies.
Instead, producers underbid their
fellow farmers so they can sell.
The net result or economic trait,
which identifies this group of com
modities we have on our needs list.
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is that small changes in supply,
real or imagined, lead to very big
changes in prices. Economists
describe these commodities as
being price inelastic.-
On the other hand, those com
modities on the want lists have a
different set of economic traits. A
' small reduction in supply of one of
’ them will not result in a bidding
war among consumers because,
after all, they are not necessities.
Prices for such commodities are
said to be relatively price elastic.
In other words, prices for such pro
ducts do not go up or down a great
deal with small changes in supply.
A few weeks ago, while attend
ing The Pennsylvania Vegetable
Growers Association meetings at
Hershey, I listened to a presenta
tion made by an innovative
market-oriented young farmer
from North Carolina. His presenta
tion was very good and was so sti
mulating that I and several others
sought him out later, and he led a
lively discussion in the corridor.
The man’s name is Mr. Carrigan.
He lives in Mooresville, N.C., and
he made a comment that I’d like to
pass along to those contemplating
diversification of their farming
operations or those looking for
alternative crops. When asked why
he was shifting to flowers, orna
mentals, Christmas trees and the
production of other non-food items
rather than increasing outputs of
some of his food crops, he replied
that he could make more money
catering to peoples wants than he
could producing food to meet their
needs. I thought he made a very
strong point. I would not attempt to
Paying Top Prices For
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explain exactly what he meant, but
I believe he was correct After all,
food is not often in short supply in
this country, as hamburger was
believed to be back during the
1970’5. Generally there is abun
dance, and prices tend to be low
because food is a necessity and
price inelastic. Mr. Carrigan is a
direct marketer so he does gain the
profits and incurs at least some of
the costs experienced by middle
men in a more typical system. If he
were to expand production of food
items, he’d drive his prices down
still further. Once his customer’s
stomachs are full, they want no
more. But when his customers’
appetites are satisfied for bedding
plants or any number of other non
food items, prices will not have to
fall so low to sell the remaninder -
EAR CORN
Call Anytime For Price
717-665-4785
.they are more price elastic. When
we think of all the pets, pet food,
bird seed, etc. that are, or could be,
on consumers’ want lists, I think
Mr. Carrigan is making a good
point. Why expand by producing
more for an already over supplied
market.? Maybe we should look at
consumers want lists and produce
something they want -- and, oh
yes, be willing to pay for.
t&iyie oh Yi.v *>(.»£ &V«*/
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