Factors Influencing the Price of Rice
Factors that affect Rice
Prices are as follows:
- Weather: Role of weather in rice production is immense.
Temperature, rainfall and soil moisture are the important parameters
that determine the crop condition. Further, natural calamities can
also affect crops. Markets keep watch of these developments.
- Minimum Support Price: Changes in the minimum support
prices (MSP) by the government also have immense impact on the price
of rice.
- Government policies: Exchange rates, Fiscal policies,
Export incentives and export promotion also influence price.
- Substitute Product: Availability of substitute products
at cheaper rate may lead to weakness in demand. This situation
happens especially when the main products price tends to become
higher.
- Consumption: Rice consumption depends on two factors -
population and income. Lets take for example Asia. Rice is the
staple food of Asia. Low-income groups consume more rice according
to the per capita income increase. But as the income increases,
there arrives a point when the consumption starts to dip. Income
growth and reduction in population result in a low consumption of
rice.
- Seasonal cycles: Seasonal cycles are present in rice
cultivation. Price tends to be lower as harvesting progresses and
produce starts coming into the market. At the time of sowing and
before harvesting price tends to rise in view of tight supply
situation.
- Demand: Import demands as well as domestic demand.
- Breakthrough in the technology may increase the productivity and
would lead to more supply. This may bring some softness in the
price.
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