Market demand

Continuing last week’s theme of the ‘Big Five’ of fresh produce marketing, I’d like to consider a few aspects of demand.

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In the first three or four months of this year, most fresh produce markets experienced higher prices than normal for many products. Veteran salespeople were unable to explain this increase in demand. Record turnovers were posted by many market agencies and people were asking: “Where’s the traditional post-Christmas slump?” Now, as we’re entering winter and prices normally show some upward movement, turnovers are down and there doesn’t seem to be any demand. And I’m hearing leading market agents saying they don’t understand what’s going on.

No one really knows
When pressed for reasons these agents offer unconvincing explanations such as: “Well, the economy is down” or “There’s no buying power anymore” and so on. Between the vagaries of nature, the economy, politicians and the fresh produce itself, it’s hardly surprising nobody can come up with an accurate appraisal. It seems to be the nature of the beast. Many factors influence demand and none of the reasons people give are necessarily wrong; but they’re also not the whole answer.

The subject is too complex for that. Take the example of volumes. Nobody, except the individual producer, knows the volumes of each crop that can be expected on the market. Even market agents in daily contact with their producers can, at best, only offer a guess of what’s in the pipeline. Usually, when prices have been high, one can expect an increased flow to market next time round as farmers add more hectares of the crop or new farmers come into production, hoping to catch those high prices.

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Hand in hand
Most of the time, these increases result in a price slump because supplies have gone up and demand has consequently come down. The issue is further complicated by the crazy weather patterns we seem to be experiencing, which not only affect production but also have an effect on consumer demand. In short, supply and demand go hand in hand, but there’s no telling how much each will influence the other.

Contact Mike Cordes at [email protected]. Please state ‘Market floor’ in the subject line of your email.