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Q.

It is generally believed that the commodity prices are governed by demand / supply equation. But it is observed that for items like fruits, vegetables etc prices vary significantly from place to place defending upon the income of the people living there. Is it a fair trade practice? Your views?

Tags: money, relationships, politics & government
Asked by Good Citizen, 13 Mar '11 03:47 pm
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Answers (9)

 
1.

1) Really a very pertinent question on the business ethics.
2) We all know that the practical world is very different from the theory of demand and supply. The above theory works perfectly well in an ideal economy where there are good rules and regulations and stricter law enforcement and timely justice delivery system. I do not think that such a system exists in a developing country like India even though it boasts of entering a rarified club of USD2T economies of the world.
3) I do not think that there exists a moral and ethical standard for the business sector in India. It does not mean that they do not follow the accepted norms. However, it all depends on the founders stand on such issues.
4) When the primary purpose of the business is to make profit and maximize the wealth of the investors / shareholders / owners, all other things including the core ethical values take back seat when the competition is cut throat.
5) To a large extent businessmen / traders believe in the a ...more
Answered by Tony Fernandez, 13 Mar '11 11:34 pm

 
  
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2.

Food stock generally fall under the PRIMARY GOODS category not CONSUMER GOOD. Primary goods are goods whose demand doesn't naturally increase along w/ income level increases. If u r making Rs. 5000 and eating 5 kg of rice (for example's sake) and u r happy w/ it, keeps u r belly full etc, when u make Rs. 20,000 a month are u gonna consume 20kg of rice? NOPE! U r gonna buy urself a brand new ipod (consumer good) or a car on loan (consumer good).

So in free market societies, smart farmers- but mostly middlemen- usually create a shortfall in supply to create artificial demand. And this hoarding is done in proportion to local income levels, which is why u notice what u notice.

It is not fair trade practice, but the free market mechanism has never given u an answer on how 2 deal w/ primary goods. In US and EU, u have only 2.5 to 5 percent of the pop. being farmers. These guys are large scalers. But in India u have a case where 60 percent of total farming pop. are small scaler farme ...more
Answered by A Moin, 13 Mar '11 03:52 pm

 
  
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3.

It iscertainly not afair trade practice but it maybe very difficult to control the prices at different places , as the dealers are scattered and unorganised. However the process maybe started with the packaged items like tea,tomato sauce etc , where also there is a huge price difference between various brands.
Answered by HEMANT MEHTA, 13 Mar '11 03:53 pm

 
  
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4.

In India it appears that the theory of demand / supply is not at all applicable . The reason is middlemen and Govt . Today's news says that the price of Radish ex farmer now is Rs 3 / Kg as against Rs 25 / Kg.a few months back . When the retail price to consumer goes high , the profit goes to middlemen and retailer but never to farmer . When the price crashes the loss is farmer's . Sad story in India . The reasons are (1) No Govt agency is there to offer reasonable price to farmer (2) There is no cold storage facilities at all for farmers to store the surplus so issues can be regulated . (3) Govt restricts movements of products within the state and this shoots the price in areas where the product is in shortage . Recently an expert said " The volatility of veg and cereals is inversely proportional to the area of market . Larger the area like entire India , lesser the volatility of price .(4) Middlemen maintain their profit irrespective of supply / demand . Less supplies , higher the pr ...more
Answered by RAMASWAMY VENKATESH, 13 Mar '11 04:23 pm

 
  
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5.

Apart from demand and supply the prices are subjected to fluctuation due to transport, storage, season...etc. If traders are to carry a long distance ,they will obviously charge transport plus labour cost. Also they often charge a higher price at a location where peoples can afford,on the other hand it is comparatively cheaper at slams. This is because the traders are to pay at higher rate for an establishment outlet at a area where high income group people lives. If the excess pricing be very much logical then we should not say it is unfair trading. Take the example if you are to hire a place at 5X5 sq.ft area for a shop you might have to pay 625000/- Rs while it will be only 50000 to 100000 /- Rs at Andheri slum area. Hence the difference in pricing due to location comes to play. Hope I explained.
Answered by Santiranjan Pal, 13 Mar '11 04:00 pm

 
  
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6.

HYDERABAD based Stock broking Company... offering Commodity Trading with the following Benefits:

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...more
Answered by Seenoo, 10 Feb '12 10:40 pm

 
  
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7.

There are other factors like logistics , middlemen playing spoil sport
Answered by saranathan Narasimhan, 13 Mar '11 04:24 pm

 
  
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8.

Jamakhori samho phir jaanoge sirji . mera bharat mahan ;-))
onion prices have doubled then halved in 3 months. that means either production-supply doubled then halved or consumption doubled then halved. actually neither happened. toh it was just jamakhori :-))
Answered by suppandi, 13 Mar '11 03:50 pm

 
  
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9.

Yes not evey pricetag u pay is fair
Source: logic
Answered by simon waaras, 13 Mar '11 03:48 pm

 
  
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