How food prices affect what, and how much, farmers produce
ANALYSIS: In principle, if prices for a particular food are high, farmers will produce more of it, right?
It might seem like a straightforward equation, but it’s not normally as simple as that.
Food prices are a hot topic in the aftermath of the Commerce Commission’s supermarket report, which identified significant problems in the supermarket industry. It said shoppers are paying high prices by international standards, and supermarkets are making high profits.
But the high cost of food doesn’t generally benefit the farmer so much as the supermarket.