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Commentary on microeconomics. The main problem outlined in the article is low price of tomatoes in Coimbatore market, Tamil nadu

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Introduction

´╗┐Title of extract: Farmers see trouble as tomato prices nosedive Source: Times of India Date of publication: July 20, 2011 Date of commentary written on: November 13, 2011 Section of syllabus: Microeconomics Word count: 660 The main problem outlined in the article is low price of tomatoes in Coimbatore market, Tamil nadu. This is a result of surplus of tomatoes in Coimbatore caused by high supply of tomatoes. The basic economic problem, that is, for whom to produce? (Distribution of goods) is being faced by the farmers. In this graph, we can see that supply has increased indicated by the rightward shift in the supply curve from Se to S 2. This shift has resulted in the price falling from Pe to p 2. ...read more.

Middle

to the new supply curve(s 3). This in turn increased the price from P 2 TO P 3. This graph shows demand and supply in the market of Kerala after the arrival of onam festival and before it. The equilibrium demand is De and equilibrium supply is Se. Firstly, the supply increases from Se to S2 because of a bumper harvest and to prevent from loses they move their that part of the market to Coimbatore represented by the reverse movement from S2 to Se. Later when the festival season arrives the demand increases indicated by the rightward shift of De and in respond the supply also increases from Se to S2. The outcome of the whole situation is very devastating on the farmers. ...read more.

Conclusion

That means welfare loss to the society. Therefore, the government of India should take solid steps in order to stop the exploitation of the farmers and give them an incentive for continuing producing their commodity. This can be done in many ways. First is by fixing a minimum price or floor price for tomatoes to sell at which will help the producers get a appropriate profit and buy the surplus of the commodity and sell it elsewhere in the country. The government can also form an union for tomato farmers which will in times like one discussed in the article will buffer stock and regulate the supply to get the minimum price or sell tomato in the other local markets of the country and if possible and appropriate import it to other countries. This will help farmers get high profits as well as improves the trade balance of the country. ...read more.

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