FACTORS AFFECTING PRICE OF AGRICULTURAL PRODUCTS

FACTORS AFFECTING PRICE OF AGRICULTURAL PRODUCTS

FACTORS AFFECTING PRICE
The factors that affect pricing of agricultural products include:

• Seasonal products
• Perishability nature of products
•  Cost of transportation
• Bulky nature of the products.

Seasonal products: Seasonality can greatly affect price of a products such as fruits or vegetables. During certain seasons, these products are harder to produce and therefore, will have a higher cost than when they are in season.

Perishability nature of products: Perishability nature of products can also affect the price of products. Some products that perish easily are sold at cheaper prices to customers.

Transportation: Transportation of a product can affect how much it will cost. The farther a product has to travel or the farther the producer travel to sell the product, the higher the cost of that finish product.

Bulky nature of product: Agricultural products are bulky in nature and cannot be easily carried from one place o another, therefore, the prices of the small quantity that can be carried to point where it is needed is high.

Other factors include:
Competition: Competition between companies with similar product will affect pricing of that product. If a company has a hold on the market, meaning they are the top seller or offer a product other companies cannot compete with, they have the ability to sell the product at a higher price.

Products that have heavy competition on the other hand, may offer products at a discounted rate or lower rates to stay within competition.

Product development: It costs money to make just about anything. Even items grown by nature such as fruits, still have to cost someone to grow them, harvest them, inspect them, package them and deliver. The overall costs it takes to develop a product can affect the pricing. The more labour, materials and costs put into a product, the higher the cost will be.

Demographics and Customers: The target customers and area they are in will affect the amount of a product. Factors such as the age group of customers will affect the amount of a product because younger individuals have less to spend than older individuals. The location of customers and the business will also affect the amount of a product. Products sold in rural areas will cost significantly less than those sold in busy metropolitan areas because of income, education and overall cos. factors for the area.