Poor weather leads to lower quality crop.
As people know that fluctuations in the weather conditions bring fluctuations in farm output and prices and sometimes leave farmers with low incomes, and farmers always produce low-quality grains and crops with poor weather conditions.
In Canada, a snowfall and hail in September in 2013 created poor, cool and damp weather conditions for farmers at a time when the wheat crops had to dry for later harvest. Due to the poor weather conditions last year, the production of grains and oilseeds this year decreases a lot and the quality is lower than before as well. In 2013, the production of wheat crops reached a peak which is 38% increase than 2012. The quality was also pretty high and most was of highest quality. However, the total wheat production is expected to fall around 27% this year, and almost none is of highest quality. The quality is pretty low, which also influences the selling price.
Because of the low quality grains and wheat crops, the farmers cannot even get to the breakeven point and cannot get the money that they spent on growing them back. People are not willing to buy the low quality crops, so the farmers decide to sell the crops as seeds to livestock producers. The farmers use this way to get a little amount of money back as their income. As an outcome of this situation, 10-20 percent of farmers faced to sell the crops at a price which is less than the cost of production. Also, due to the oversupply of corn and soybeans production worldwide, the world price of corn drops 34% and the price of soybeans drops 25%.
This news is about how the weather conditions affect the production and supply of the grains and wheat crops, which is more about microeconomics. As the output and quality of the grains and wheat crops are much lower than before, people are not willing to buy such low-quality products and they might choose to buy much higher-quality imported grains and crops. From my perspective, if I know that the quality of the local products is not good, I will not support for them and sacrifice my self-interest to promote social-interest. I will buy better imported products just as most people will choose. In this case, as fewer people are going to buy low-quality local products, the suppliers have to look for some methods to sell them. One way that they choose to do is to lower the price, which makes the price lower than normal, and to increase the sales. However, this way seems not quite available in this case, so the farmers also sells the lower-quality grains and wheat as seeds to livestock producers to just get some money back. Also, if a product is oversupplied in the market, people will place low value on it, and the price will also be lower due to people’s decreased level of willingness to pay for it.
Reference:
“Grain farmers produced 27% less than in 2013 and face lower prices.” CBC News. Web. Oct 31, 2014