Markets and Supply Chains
From SDG Academy on 20 August, 2019
Price fluctuations happen as a result of the storage process from seasonal harvests and the working of the markets and the supply chain, as these harvests need to be transported between production and consumption. In off-farm storage, there are issues of food safety, processing, and quality assurance. Seasonal price changes reflect the cost of storage because when simultaneous harvests occur across a huge area, prices are low, but after that, prices rise by exactly the cost of storage, or the cost of capital. Seasonal stocks are the private crops held post-harvest that are sold as the season progresses; public government stock holding is extremely expensive. Transportation costs vary hugely by the type of transport, and each country has highly variable costs because of climate and weather variation. The easiest way for a country to achieve more stable prices is almost always to achieve access to world markets into the ocean prices, which is relatively similar around the world, because ocean transport is inexpensive. Agribusiness post-harvest activities such as processing and packaging, adding fortificants, and protecting it against contaminants add value to the food but can create local monopolies in a transport system. Governments must then ensure that the value added that can improve conditions in the food system isn’t exploited and maintains food safety and health.