Co-Authored By:
Price supports are subsidies or price controls used by the government to artificially increase or decrease prices in the agriculture market.
Keeping this in consideration, what has been the effect of agricultural price supports?
Price Supports Cause Overproduction. By supporting prices above the market-clearing level, governments encourage farmers to expand production. Price supports cause larger production and smaller consumption (since consumers will buy less of any good as its price rises), resulting in overproduction at the support price.
Also question is, what is agriculture price?
Output pricing includes fixation of support or procurement prices of various agricultural crops, while input pricing refers to subsidies on seeds, fertilisers, pesticides, machinery, water, electricity, fuels, and farm credit.
Supply is the amount of goods or services that is available to sell. Supply. Demand is the desire or willingness a consumer has to purchase a good or service. Supply & Demand in Agriculture. A producer is a person or company that makes, grows, or supplies goods to sell.