Market Equilibration Process
Dee Fullington
University of Phoenix

ECO/561
Kathleen Crump
May 2, 2011

Market Equilibration Process
The last time I bought fresh produce, it was sticker shock. I decided to do a little research into why produce is so expensive. I discovered I bought the produce in the United States grower’s off-season. Produce has elevated prices in the off-season because of imported produce into the United States from foreign companies that has opposite growing seasons.
Another reason for the shock is the cost of producing fresh produce. The cost has risen at approximately 4% annually since the beginning of the 2000s. Reasons for the elevated costs of growing produce is linked to new regulations for land use, importing costs and regulations, weather, irrigation, and technology. Along with the above reasons, market information for supply and demand will also help determine quantities and price.
Market information will tell what the consumers buying trends are, if they are buying a substitute product at a reduced price or if the consumer is buying the product at the current price. Wholesalers will know what the demand for consumers and producers are. Market information informs growers of the type of crops the consumer demands, the quantity, and the season. By studying the market information the growers can plan the types of crops they plant and when they plant. The market information will also inform the growers of predictable and unpredictable changes.
Demand for produce is inelastic so informed growers know current changes, or if there is a sudden environmental change, they know the price of growing a crop escalates. Even predictable changes will affect the demand for produce. Trends are a predictable change that will affect the bottom line for a grower. One of the latest trends is consumers trying to eat healthier, which means a greater demand for fresh fruits and vegetables to meet the USDA’s recommended intake. If the consumers cannot find the produce they want for a fair price they will choose a less expensive substitute. When that happens, the farmer crops are with a surplus and have to sell his commodities for a lower price to avoid taking a total loss after the produce deteriorates.
To avoid these losses the farmer will need to pay attention to the competitors, how much they produce of which crops in the market information. By studying the market information the growers can adapt to changes, competition, and consumers allowing the price, supply, and demand to equalize.

References
Blythe, B. (2011, 15/4). Produce Retailer. In Retail prices for fresh vegetables jump. Retrieved 30/4/2011, from http://produceretailer.com/Retail-prices-for-fresh-vegetables-jump/2011-04-15/Article.aspx?oid=1317972&fid=65e17bdf-5b9a-4f3a-a45f-8f68987e6b2f&aid=1662.
Cook, R. L. The U.S. fresh produce industry: An industry in transition. Retrieved 30/4/2011, from http://agecon.ucdavis.edu/people/faculty/roberta-cook/docs/mofp/ch-02.pdf.
In the market - wholesale, retail, and market information. Retrieved 30/4/2011, from http://www.fao.org/wairdocs/x5014e/X5014e09.HTM.
Perner, L. (2008). USC Marshall. In Production Costs, Demand, and Competition. Retrieved 30/4/2011, from http://www.consumerpsychologist.com/food_Production_Costs.html.
S & G Brassicas Today. (2011, 2). In U.S.: Vegtables sales increased in third quarter of 2010. Retrieved 30/4/2011, from http://www.brassicastoday.com/en/us-vegetables-sales-increased-in-third-quarter-of-2010.aspx.