Eggs and scallions have recently formed the highest price. The market seems to be embarrassed as much as the impact of the rise in prices as it did not stand out in the shopping cart prices.
A supply shock is a sudden change in the price of goods or services. This occurs when the supply of a particular good suddenly increases or decreases. This drastic change has a balanced price impact. Negative supply shocks raise prices and shift the total supply curve to the left.)Ida.
This supply shock is a temporary phenomenon, especially for agricultural and fishery products, it can be resolved by seasonal factors, government supplies of stockpiles, and overseas supply and demand. So the government's policy uses supply-oriented policies. This is because it can be effective in the market immediately rather than in demand policies. We can see the effect of policies when there is a shortage rather than an excess. One of the most representative agricultural products is onions. Onions are representative crops that make up an imbalance in supply and demand. This is because when production is in progress, it does not pay enough to plow the fields, and due to this experience, prices are soaring when production is reduced the next year. In the case of eggs, the spread of avian influenza caused poultry farms to suffer damage and needed time to grow until the next production, and the price of green onions also rose due to the poor temporary crop. However, the impact of the market is significant, unlike the impact of supply. The reason is the fruit demand. As prices rise, expectations that they will continue to rise in the future are rising, resulting in excessive demand for hoarding, making prices rise further. However, the rise in prices due to such over-demand is a factor that fails to give the market an accurate signal and hinders rational decision-making. As the price was high, the number of farmers sowing green onions in the next year will increase and lead to a plunge in prices.
The price increase of agricultural and fishery products is temporary. However, prices in related markets have upward rigidity, so even if supply is smooth, they do not fall well. And even if the ingredients for agricultural and fishery products have risen, the price increase in the restaurant industry is not understandable. Then, it is a matter of thinking about whether food prices have fallen when prices have fallen. Too sensitive to supply shocks is not a mature market. If the market has healthy stamina, the supply shock is impossible because it passes for a while. It is time for market participants to need a road-map for long-term decision-making.
Steve(JongMyoung) Park, Ph.D.
Ph.D. in Business Administration
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