Farmer’s diary: How commodity prices control agriculture

Wednesday, 14 Aug 2013

The most important motivation in farming is the benefit the farmer gets out of an agricultural activity. For some farmers, it is satisfying just to get enough food for the family but most farmers aim at selling their produce at the highest price possible and to reap maximum profits.
Unfortunately, it is not possible all the time for farmers to set the price for the commodities they produce. For instance, the coffee producer does not set the price of the crop. Most coffee farmers are not sure where the crop goes after they have sold it at the nearest buying store.

Setting price
They produce the coffee and wait to be told its price by the buyer, who is not bothered about the production costs involved.
Other factors prevent the farmer from setting his or her own price. If the product such as matooke is in abundance, the demand for it goes down and so the price and profit the farmer had anticipated also goes down.Sometimes, the prices of commodities skyrocket when the farmer simply does not have them. As a result of the long drought that we have been through, the price of crops such as beans and maize is likely to go up.

But it is also likely that most farmers will not have the commodities in abundance because there was no sufficient rain in the past few months for the crops to grow well. Who has not read in the local press about farmers in the drought-hit areas of Sembabule District selling off their animals cheaply due to water scarcity? Prices often tend to direct the trend of agricultural production.
The apparent high prices of coffee these days have tempted most farmers in the coffee growing regions to plant coffee in space that would be for food crops, which signals future food shortage.

At risk
Other farmers have inter-cropped Robusta coffee with food crops like bananas, sweet potatoes, maize and a whole range of others, often at the risk of producing less food for households since coffee generally tends to out-compete the other crops for soil nutrients. Yet when the coffee prices fell some years back, the same farmers uprooted the coffee to grow better priced crops.

Credits: Daily Monitor