Economics Agriculture in Sa - 1331 Words

In a free market, industry is free of government intervention and regulation. Businesses therefore have the liberty to allocate resources how they wish, and to set prices at a level preferable to them individually – so long as these prices remain realistic and competitive. They logically vary depending on the economic climate in which the business operates. In some cases businesses take advantage of the seemingly boundless market in which they operate, and as a result price fixing may occur. In such a case, intervention is acceptable as an exception to the free market concept. The decision by grain farmers to ignore the suggestions of Grain SA to reduce production is an interesting real-world example of a market operating independently†¦show more content†¦The cost of production credit also increased by the same percentage. Coetzee claims that this phenomenon and the above information explain why farming has become an activity in which price and yield risk is so high, and especially why farmers with minimal debt and better land are the favourites to survive the current economic situation (2008:34). The lack of debt and the superior land quality enable farmers to reduce the negative effects of the unstable economic climate on their operations, and to compete efficiently with farmers who operate without these advantages. Due to the above, and the relative inelasticity of demand, the diminishing gap between production costs and producer prices means that the profit margin obtained from selling each ton of grain is being reduced, and farmers produce more in an attempt to counteract this: Grain SA (2005). The situation which is created as a result of this, however, is not optimal. In order to solve the surplus problem, producer prices are reduced significantly and farmers will find it very difficult of cover their costs and still make a sizeable profit. Another factor which may have caused farmers to increase supply instead of decrease it, is production uncertainty – in which case producers may lack knowledge of the elements which affected this economic decision: Deardorffs Glossary of International Economics (2000). The most relevant of theseShow MoreRelatedEssay about Fertile Ground and Difficult Lifestyle in Angola767 Words   |  4 Pagesand okra. Angola also has a variety of different kinds of sauces and different types of spices.http://books.google.com.au/books?id=3i10eQQLU8QCpg=PA108lpg=PA108dq=staple+diet+of+angolasource=blots=3HMWX5SuXgsig=Ykm-l9U9pLObBuLTGPonVceWlIMhl=ensa=Xei=8xwtU7uaHoTGkwWi8oC4Dwved=0CE0Q6AEwAw#v=onepageq=staple%20diet%20of%20angolaf=false In Angola there are two main biome types, savannah and woodlands. 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