why farmers cannot set their own prices. explain. in detail
Answers
Answer:
Yes Farmers cannot decide their own price for the grains they produce,
In the terms of policy makers and economist, it is to avoid
" Market Manipulation "and "Market Failure".
That is Agriculture is the most volatile sector where the
*Agriculture sector cannot maintain a equilibrium level of pricing.
* The price inelasticity of supply in short run.
(The prices in short run may not adjust to the supply ).
Economical condition of agricultural sector were listed above, which makes the government to interfere in the agriculture prices.
But practically government intervene for various reasons
Which are listed below,
1. Farmers are subsidised to produce more, while they get fixed percentage of money for the crops to produce means farmers are employed by the government to produce certain grains , hence the farmers are mere employee( sorry to say) here to produce as wished by the Government.
2.Market should not operate in low price with increased supply of grains in the time of bumper harvest , hence government reduce the subsudies to boost the prices go high.
3.Farmers are encouraged to produce more BIO FUEL crops to control Global Warming by increased subsidies, the price such crops Which are obviously fixed by the Government because it wanted to do so...
4.Government also doesn't want the price to go high which may happens while the farmers individually move on to set the prices for their own grians, market would get disturbed by such individual movement.
5. To ensure Buoyancy in the Market, Government takes relevant measures. ( interventions) through various functions.
As a bottom line I would like to note even big / small companies or any other organisation cannot fix the price by it own. Various factors like competition, market demand, tarriffs etc. Would determine the prices.