Governments influence prices of commodities by regulating imports and exports, taxation and subsidies. Weather conditions either favor or affect different produce. Seasons determine planting and harvesting which in turn determine supply. Costs of production of different commodities are usually transferred to the consumer hence affecting the prices.
Customer confidence on integrity of a given commodity determines demand and thus influences the prices. Festivities such as Christmas seasons increase demand for certain commodities hence dictating their prices. These and many other factors determine whether price of a given commodity will either go up or down. This paper discusses some of the factors that affect the price of milk powder, cooking oil and rice.
Influence on price of milk powder Milk is one of the most important commodities consumed by man all over the world. Milk is used in different forms such as fresh milk, skimmed milk, milk powder, ghee among others. Milk price depends on different factors. These are some of the factors that determine the price of milk powder:
Milk powder is a by product of milk a product obtained from cows. The amount of milk produced by cows depends on how well the cows are fed and the prevailing weather conditions. When there are enough rains there is more feeds to give to the cows and hence more milk.
The cost of producing milk at this time goes down and this means more milk at a low price. Due to more supply than demand the prices of milk goes down. However when there is drought or other catastrophes such as cyclones and floods as was witnessed in milk producing areas such as Australia and new Zealand cows produce little milk as there is less feed and at the same time the cost of producing milk goes up and this cost is transferred to the consumer thus the price goes up.
Disease Outbreaks and Contamination
Milk powder being a food product is vulnerable to contamination and food poisoning. When there is disease outbreak the government will always issue a ban on exportation or importation of milk and milk product hence increasing the price of the few stock of milk powder left in a country.
Get your 100% original paper on any topic done in as little as 3 hours Learn More Customer confidence may be eroded when such news of disease outbreak or milk contamination comes out. Customers are afraid to take milk and milk products and prefer other alternative sources. This was witnessed when milk from China was suspected to be contaminated and people avoided milk powder hence making the price of milk to shoot down. Disease out break may affect cows making them produce less milk hence the demand surpasses the supply causing the prices to shoot up.
Milk powder is usually more consumed when the fresh milk is scarce or more expensive. This means that when the rainy seasons come, fresh milk supply is more and at a low price thus people consume fresh milk more than milk powder due to the low cost hence the prices of milk powder goes down.
During dry seasons fresh milk becomes very expensive and people prefer powdered milk instead thus increasing demand which in turn raises the prices. Milk producers make more milk powder at time when there is plenty of fresh milk and then sell it when it gets scarce.
The government always has the upper hand in regulating the prices of commodities in order to protect its citizens from high prices. A very good example is the total export ban of milk and milk products from India the worlds biggest milk producer. By doing this the government has regulated the price in that country and at the same time this caused increase of the price of milk and milk products to other countries where that milk is exported.
The government may also subsidize the production of milk and thus the price of milk and milk products such as milk powder reduces. Government taxes may also affect the price of milk powder. When the government raises tax on milk and milk products the price of milk powder is likely to go up and also go down when government decides to waive taxes on milk the price goes down.
When there is inflation in a given country prices of all commodities increase. This means that the price of milk powder will go up since the cost of production will have gone high. When the opposite happens and the economy of the country improves all the costs of production goes down and hence the price of milk and milk products goes down as well.
Price of other related goods
When prices of other related products change the price of milk powder will also change. The price of other complementary goods such fresh and long life milk may change due to various reasons such as cost of production of those commodities. The price of fresh milk may be low during rainy season and high during dry season and this affects the demand of milk powder.
We will write a custom Report on Prices of Milk Powder, Cooking Oil and Rice specifically for you! Get your first paper with 15% OFF Learn More If their prices goes up then demand shifts to milk powder which is likely to make prices go up however when the price goes down people shift from milk powder to complementary products hence demand decreases which makes prices to go down.
Changes in the cost of production
Milk powder heavily depends on heat processes to steam the milk until all the water has evaporated. Many milk factory plants use either electricity or fuel to process milk powder.
When there are changes in the prices of electricity or fuel as it happen when global fuel prices increase the cost of production and transport increases hence raising the cost of production for milk powder resulting to increased consumer prices. The reverse happens when the cost of energy goes down. However the greatest determinant of the price of milk powder is the changes in seasons which heavily affect the supply thus affecting the prices.
COOKING OIL Cooking oil is a commodity that is very important to man due to its wide variety of uses. The price of cooking oil depends on a number of factors or a combination of factors. Some of these factors include weather conditions, cost of production change in other uses among others.
Cooking oil is produced from plants that produce oil seeds which are processed to make cooking oil. Some other forms of cooking oil are processed from animal products.
Weather conditions affect both plants and animals. When there is adequate rainfall and other climatic conditions that are favourable for growing of these plants then production cost increases and this increases supply hence the prices goes down. When there are droughts or other unfavourable weather conditions such as floods, supply reduce and consequently the prices go up.
Costs of production
The processing of cooking oil demands use of high temperatures during the process of hydrogenation. This implies that when the price of energy increases as it happens when global oil prices goes up the cost of production goes up and thus the price of cooking oil also goes up. When the cost of energy especially global oil goes down the cost of production goes down and thus cooking oil prices go down too. Cost of farm inputs such as fertilisers and pesticides are usually transferred to the consumer hence increasing prices of cooking oil.
Other oil products
There are different uses of vegetable oils especially in the industries such as soap, candles, cosmetics and other products. When the demand for these products increases manufactures prefer investing more on producing these products and this implies that the supply of cooking oil will reduce hence increasing the prices.
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Most of the oil consumed in the world is processed from palm and soya bean which thrive well in certain countries. United States of America is believed to be the world’s largest producer and exporter of cooking oil and other related products. This implies that the price of cooking oil will largely depend on the economic stability of the producing countries. This can be seen when cooking oil prices increased during the U.S economic crisis period. The prices later went down when the economy stabilised.
It is believed that the world’s population is increasing with time due to various factors. When the population increases in certain areas especially due to urbanisation then demand for cooking oil surpasses the supply and this causes the prices of cooking oil to go up. This can be seen in countries that have recorded high urban development which have made demand to go up in those areas.
Cost of other related goods
Cooking oil is used for cooking various foods. Different kinds of food are made in different communities. When food supply is high the demand for oil to cook the food also goes up and this means that the price of cooking oil will rise up. When food supply goes down there is relatively less food to cook with the cooking oil and thus demand for cooking oil decreases making the prices to go down.
There has been claims that some cooking fats and oils contain a substance called cholesterol that has been linked with heart and other related diseases. Due to relatively higher cholesterol levels in cooking fat than in cooking oil then the population prefer using the safer alternative and that is cooking oil.
This increases the demand of cooking oil hence increasing the prices. This is more common in markets where the consumers have the ability to spend more on the safer alternative. The same effect is usually observed when health experts intensify the campaigns towards safe cholesterol levels since customer awareness makes them to prefer cooking oil rather than fat hence increasing the demand of the latter.
Technology of producing cooking oil
A lot of input goes towards production of cooking oil. The efficiency of the production processes determines the overall cost of production. Due to the current advancement in technology new production techniques especially in crushing and hydrogenation processes have been invented and this has resulted to low production costs. This is clearly observed in the developed countries such as America where they use more efficient production technologies as compared to other oil producing countries in developing world.
This is likely to reduce the prices of cooking oil in developed countries as compared to developing countries. Market forces and other factors behind production and selling of cooking oil have resulted to relatively constant prices of cooking oil throughout the year as compared to other products such as milk which may fluctuate in different seasons of the year.
RICE Rice being a cereal is one of the most important food commodities in all communities of the world. It is a staple food for some communities a very important source of starch and energy. There are many other uses of rice such as rice Bran, husks, milk pudding and so on. Rice prices depend on many factors some of which include.
Its believed that weather conditions such as the amount of rain, temperature and other factors greatly affect the production of rice which largely depends on enough water and soil moisture during the planting season and a dry weather conditions during harvest season, when these conditions are favourable the supply goes up hence the prices goes down. When there are calamities such as draught and floods then production reduces and this increases the price of rice.
Rice being a cereal has many substitute products such as maize and wheat. When the price of other substitute commodities goes down, consumers shift towards them as an alternative hence reducing demand of rice which results in reduction of rice prices. When prices of other substitutes go up, people shift to the cheaper alternative, demand for rice increases thus raising the prices.
Rice is heavily dependent on seasons due to its requirement of special growing conditions. The supply is usually high during harvest season and this increases supply thereby reducing the prices. The prices then shoot up during planting season when the supply is less than demand.
Government plays a very influential role in regulating prices of commodities. Government may subsidise rice production, regulate export of rice. This in turn may reduce the cost of rice on its country and on the other hand government may ban exports of rice to other countries for various reasons. This makes the supply of rice in those countries to go up hence raising the prices.
Rice is used for making a wide variety of products such as rice adhesives, vinegar, paper, beverages, rice milk and other products. When the demand for these products increases more rice is needed and this makes supply less than demand resulting to increase in rice prices.
Advancement in technology allows production of rice at a lower cost and this makes it possible to reduce the price of rice in the market. Other factors that may influence the price of rice include festivities such as Christmas seasons. There is more rice consumption during these times as compared to other times especially in communities where rice is not the staple food.
This makes the rice price to go up during these seasons. Competition with other rice producing countries makes the supply to increase and as different suppliers fight for the available market they reduce prices. The price of rice is dynamic and is likely to change in different seasons of the year due to different factors such as planting and harvesting seasons and festivities.
Countries that produce rice often compete for the available market. When the supply is greater than demand then the producers reduce the prices in order to capture the market this makes the prices to go down. On the other hand when there are few producers compared to the available market the producers may increase the prices if the competition is low.
Demand of rice may rise due to various reasons such as increase in population of a given community or country, urbanisation which raises population in urban centres. Demand may also increase when the economic status of the consumers increase. There are more consumers who have the potential to buy rice and these increases the demand. When demand is high the prices go up.
Conclusion There are different factors that influence the price of commodities at the market. These factors either directly or indirectly affect the price of one commodity or another. Sometimes the price is affected by a combination of many factors.
Milk powder prices have been seen to be affected by different factors such as prevailing weather conditions which affect production, disease outbreak and contamination which affects consumer confidence. Changes in seasons along the year have been observed to be the largest factor affecting milk powder production. Government policies, inflation and cost of other related goods contributed to changes of price of milk powder.
Different factors were observed to affect the price of cooking oil. These factors were seen to vary from weather conditions which increase or decrease production of cooking oil, cost of production as production process uses a lot of energy, economic stability of producing countries. Other factors include influence of emerging markets, cost of related goods, health factors and technology.
The price of rice was observed to be affected by different factors such as weather conditions during the growing season, the prices of other substitute commodities such as wheat and maize, seasons which determine supply during harvest and planting periods. Government policies such as export regulation, taxation and subsidies could affect price of rice. The cost of production, production technology and festivities were other factors that could either result to rise or fall of price of rice.
The price of cooking oil was observed to remain relatively constant along the year with probable slight fluctuations due to increased demand as observed during festive seasons. However the prices of milk powder is greatly influenced by change in season with prices going up during dry seasons when there is more demand and goes down during rainy seasons. The price of rice was also observed to be volatile rising up during planting seasons when supply is low and goes down during harvest seasons when the supply is high.
Beef, Mutton, Chicken Report
Nursing Assignment Help Introduction Products such as beef, mutton, and chicken have become regular staples in the diet of billions of people around the world and as such they command a significant level of consumer demand however just like any product various external influences can result in a dramatic shift in their prices especially if their means of production are directly affected.
Today, the prices of beef, chicken and mutton have invariably changed compared to what they were several decades ago. While it may be true that salaries have also risen along with the prices of certain goods the fact remains that modern means of agricultural production have greatly improved since the early to mid 1900’s resulting in a far more efficient and faster means of raising cattle, sheep and chicken.
One basic economic principle dictates that demand should match supply in order for the most efficient means of production and distribution to occur. Lately various statistical data has shown that the amount of supply created (beef, chicken, mutton) actually exceeds the amount of demand in cases with large excesses of production.
One example of this can be seen in the various countries of the E.U. due to the CARP (common agricultural policy) which has helped in creating an overabundance of certain agricultural products (beef, mutton and chicken included).
Despite this factor, prices of beef, chicken and mutton have not been going lower and in fact there is a growing trend of significant increases in their prices especially in developing and third world countries. This indicates that other factors are at work in affecting the prices of these products since despite the abundance of supply prices have not been going and instead have been increasing.
Understanding Tariffs, Protectionist policies and their effect on the importation of beef, mutton and chicken It is a well known fact that when it comes to producing certain goods or services some countries are better at it than others. A truly ideal situation would if countries focused on what they are best at making and not produce anything else.
Unfortunately various countries tend to diversify their production capabilities in order to remain, in their words, “economically competitive” when in fact their production of a plethora of various goods is not as efficient as producing what they are good at and taking the methods of production of that particular commodity to their zenith.
Get your 100% original paper on any topic done in as little as 3 hours Learn More Various countries have their own agricultural means of raising cattle, sheep and chicken however due to their limited capacity in doing so there remains a distinct necessity to import such products from other countries in order to make up for the lack of supply.
The inherent problem with this is that most countries tend to erect protectionist policies such as limiting the amount of beef, chicken or mutton being imported into the country or imposing strict tariffs which increase the price of such products. Such measures are done in order to protect local industries from being overwhelmed by cheap foreign imports.
Mentioned earlier was the fact that some countries are basically better at producing a certain type of product as compared to others. As such the overall prices of goods that are produced can be significantly lower than that of other countries that have a harder time in producing the same type of product.
If tariffs and various other protectionist policies were not put into effect, as defined by a free-market system, then most people would prefer the obviously the cheaper and plentiful foreign imports rather than the expensive and limited locally produced products.
Taking such factors into consideration it can thus be assumed that countries with a limited production capacity for beef, chicken and mutton would thus have stringent protectionist measures in place to prevent cheap foreign imports from flooding their markets and driving local farmers out of business. In such a case beef, chicken and mutton prices are artificially raised not out of a lack of supply but rather out of the necessity to protect an inefficient system of production.
While such a system may not make sense from an economical standpoint it does from a socio-political one since the backlash from farmers who have significant influence in various political groups would cause potential problems for the government. There is also an ethical standpoint to consider since the oldest businesses in most countries are often agricultural enterprises and as such knowingly allowing them to go out of business in order to let consumers have lower prices is morally ambiguous at best.
The oil industry and the added costs of transportation For those of you that follow the news on a regular basis a distinct relationship can be seen between the price of oil and that of products such as beef, chicken and mutton. The price of oil at any given date adversely affects the price of products in the global economy which in turn affects the prices of basic commodities such as food. In order to better understand this concept it is necessary to take into account three distinct factors:
We will write a custom Report on Beef, Mutton, Chicken specifically for you! Get your first paper with 15% OFF Learn More Cows, chickens and sheep are usually raised in areas far from where they are actually eaten
Gasoline fueled trucks are needed in order to transport them to locations where they will be butchered and then from there to supermarkets where they will be bought for consumption
Lastly, while the international exportation of beef, chicken and mutton is cost prohibitive in certain cases there are instances where demand is so great that the added cost of tariffs is negligible
The first and second factors are easy to explain, since cows, chickens and sheep are located in farms that are beyond most city limits the added cost of transportation is factored into the price when such meat or poultry products are sold. As such there is an inverse relationship at play wherein the higher the price of gasoline gets the higher the price of meat and poultry products become despite no added value being introduced into the products themselves.
The third factor to consider deals with the fact that international oil prices affect large container ships just as much as they affect cars, trucks and buses, while container ships may be able to offset prices by adding more cargo items to their manifest the fact remains that this is only a temporary stop gap measure and eventually rising oil prices will affect the price of international transportation.
This presents a problem for international exporters since if a country has high protectionist rates for certain types of meat and poultry products and is combined with the increased cost of transportation prices of beef, chicken and mutton would of course have to be increased as a result.
The inherent problem with this lies with the fact that overly high prices would discourage consumer consumption of certain goods and since meat and poultry products rot easily there is a possibility that various exporters would lose money over the products they export.
How droughts and natural disasters affect the price of grain and corn which in turn adversely affect the price of beef, chicken and mutton In the past cows, chickens and sheep were fed natural agricultural products such as corn, maize or were merely grass fed. While such a practice continues in isolated farms up to this day a majority of farms feed their livestock using corn meal or pellet derivatives that come from corn products.
The reason behind this is that this special type of agricultural feed contains higher levels of carbohydrates which helps to easily fatten cows, chicken or sheep. As seen in numerous documentaries animals that are fed such products grow faster and are far larger than other animals fed on natural products.
One unfortunate consequence of this is that should areas that produce the corn that goes into the pellets be affected by an external force the price of the pellets go up which as a result affects the price of animals sold due to the increased cost in feeding them. Various abnormal weather patterns, storms, hurricanes and typhoons that adversely affect corn producing regions have the effect of increasing pellet prices due to affected supplies which in turn affects the price of beef, mutton and chicken.
The Status of the Global Economy and how this affects meat and poultry prices When the global economy entered into a recession following the U.S. housing collapse overall consumer demand dropped creating an adverse effect on the prices of beef, mutton, chicken as well as other commodities.
Not sure if you can write a paper on Beef, Mutton, Chicken by yourself? We can help you for only $16.05 $11/page Learn More In order to show the proper relation between the recession and its effect on prices what this paper will do is conduct an examination on how consumer preference over product choice changes depending on the status of the global economy. When the 2008 global recession hit not only did this result in the collapse of multiple companies but also brought forth a concept called “consumer fear”.
This particular concept posits that a chaotic external financial environment will result in a lack of consumer confidence in the stability of companies as well as financial institutions resulting in distinct reluctance for them to spend. Such a situation was clearly seen at the start of and in the years during the financial recession where the distinct lack of consumer spending was one of the main reasons why the financial crisis continued to exacerbate the way it did.
The price of goods and various commodities are inherently linked with the rate of consumer spending, the lower the amount of people buying products at any one time the greater the likelihood of companies choosing to lower prices in order to entice customers to spend. Unfortunately lack of consumer confidence in the economy continued to worsen the stagnation of consumer spending habits resulting in even lower prices however no one was actually willing to commit to buying.
One of the reasons behind this lies with the fact that as the financial crisis worsened millions of people around the world lost their jobs and as a result lacked the appropriate amount of consumer confidence to actually buy certain amounts of meat or poultry products due to the limited amount of funds available.
An unfortunate consequence of this is that suppliers try to balance the amount of supply and demand by reducing operations, unfortunately this resulted in various supermarkets losing a vast majority it of meat and poultry inventory which gradually increased the prices of the remaining stock however in this case the continued lack of demand caused intense fluctuations in prices that they changed on an almost monthly basis.
On the other hand once the economy had recovered to a sufficient level and consumer confidence returned prices continued to remain high as the previously reduced level of operations meant that despite the higher level of demand suppliers could not match it. This resulted in another series of price fluctuations until finally both the supply and demand side stabilized as a result of an increase in operations on the side of the supplier.
It is based on this that a definite relationship can be seen between the prices of beef, mutton and chicken and the state of the global economy. On the other hand there are exceptions to this; countries such as the Philippines, South Korea, Indonesia and Taiwan were not greatly impacted by the financial crisis so as a result no great degree of price fluctuation occurred in their markets for meat and poultry.
It must be noted that while the global economy can directly impact the prices of beef, mutton and chicken the fact remains that what affects one country may not affect another and as such one of the best indicators to determine the rise or fall of prices is to look at supply side of the production line since prices of produced commodities are more likely to be affected by changes in how they are made or transported rather than the financial system where they are bought and sold.
State of the Local Economy One interesting aspect that must be mentioned is the fact that it is not only economic depreciation in the form of a recession that also affects prices but also excessive economic appreciation. When examining the prices of products sold in the U.S. with those sold in countries such as the Philippines and Taiwan it becomes apparent the basic commodities sold in the U.S. are apparently more expensive than those located in other countries despite them being exactly the same.
The reason behind this is a combination of two factors: first is the inflation of the U.S. economy over the past few decades and the set minimum wage in the country. Inflation can be described as a distinct rise in the level of prices of certain good, commodities and services within a particular economy over a set period, usually in the span of a few years.
As the price level of commodities rise the ability of currency to purchase those types of goods goes down. On the other end of the spectrum the minimum wage allotment for workers also plays a crucial role in the rise of prices as the high minimum wage rate in the U.S. compared to various Asian countries actually causes prices to go higher. Businesses have to set a certain price for goods and services that takes into account the wages given to employees of the business.
The higher the amount of the allotted minimum wage the higher the price of production and services would be. On the other hand Asian countries have a far lower rate of minimum wage as such the price of commodities such as beef, mutton and chicken is far lower as a result. As such while the purchasing power of the U.S. is high in other countries within its own borders it is actually quite low compared to what a person could get for the same amount in another country.
Understanding When Price Shifts Occur and Why When it comes to understanding how and why price shifts occur for beef, mutton or chicken over a given year it must first be stated that due to differences in overall biology price shifts for chicken are distinctly different than that of beef or mutton and as such must explained separately from there. The cattle and sheep industry actually revolves around a cyclical cycle that expands and contracts over an 8 to 12 year period due to the biological cycle of the animals.
There is actually a 3 year time lag in the time it takes a producer to receive the signal to expand herds to when calves/lambs are produced and the older cows and sheep are slaughtered by companies for various meat products. As such the cycle follows a distinct cycle of herd expansion and herd liquidation. It is due to this that price shifts naturally occur during the periods of herd expansion and herd liquidation.
If a certain year falls during a date where herd expansion is in place it is unlikely that prices would be low due to the lack of animals actually being slaughtered, on the other hand during years where herd liquidation is in effect prices would of course be lower. The thing is though periods of expansion and liquidation are not set to a particular industry standard with different producers choosing different times for either expansion or liquidation.
It is due to this that price shifts naturally occur between countries depending on the schedule animal ranchers adhere to with the price of beef and mutton either increasing, decreasing or staying the same depending on the extent of cattle operations in that particular country or on the amount of beef being imported or exported. It must be noted though that the cycle of expansion and liquidation is actually vulnerable to changes in the weather, inflation, shifts in grain prices, and changes in the overall structure of the industry it is part of.
Such changes do not reflect on that particular year but are seen later on in the succeeding year as the amount of animals actually slaughtered may be far lower due to culling measures undertaken in order to reduce the costs of operations. Chicken prices on the other hand are dictated by seasonal factors and the cost of grain or grain derivatives that are fed to chickens.
The fact is most chicken feed is derived from various form of grain and corn meal, during times of the year where grain is in abundance chicken prices usually go down however if there has been a drought the resulting increase in grain prices will adversely affect chicken prices.
Seasonal factors also play a factor in this, winter months are usually not as conducive to raising chicks as compared to spring, summer or autumn as such the chicken population suffers as a result especially during instances where an increased rate of liquidation occurs.
Variances in consumer demand over the course of a year also affect prices, holidays in particular cause sudden rises in prices as the demand for particular products exceeds that of the available supply. Consumer holidays such as Christmas, New Years, Thanksgiving and various other holidays attributed to different religions all play a part in increasing demand and as a result the price of commodities.
Beef, mutton and chicken in particular are in great demand during such occasions and as a result prices increase in order to take advantage of the demand. It must be noted though that at times prices are increased without any problems with the supply line of a particular product. Various stores are able to match or even exceed demand with stored supplies yet increase prices due to the almost assured level of profits that they would incur over the holiday period.