Price fluctuation/ instability refers to the sudden changes that occur in the price of agricultural products. Prices of agricultural products often rise and fall erratically.
Why do you think the price of agricultural products flactuates?
a) Agricultural products are perishable which forces farmers to sell them immediately after harvesting at low price.
b) Bulkiness of agricultural products which makes their transportation from areas of plenty to areas of scarcity difficult.
c) Poor transport network which makes delivery of products from production areas to consumption areas difficult.
d) Natural hazards such as pests, disease, and drought which lower output,
e) Lack of farming groups such as co-operatives to increase bargaining power for better prices.
f) Variable quality of products which leads to variable prices.
g) Inadequate storage facilities which forces farmers to sell produce when prices are still low.
h) Seasonality of produce which causes prices to fall at harvesting time due to surplus of produce and rise in price after harvesting due to scarcity,
i) Competition from synthetic products which are cheaper forcing the farmer to lower prices
of agricultural products,
j) Large number of small scale producers who individually cannot influence market prices.