PRICES AND ECONOMIC POLICY IN WESTERN-EUROPEAN HORTICULTURE

In a very simple form this scheme is as follows:

1. in the market a price level arises to adjust demand to a given supply;
2. the costs connected with the supply have already been made, so the price (sub 1) also determines the suppliers income;
3. this income influences the development of production and thusthe price affects the supply which will be put on the market in future.

This theoretical scheme is too simple to explain the main lines in the development of economic activity in horticulture. The price may regulate this activity, but it is not the only factor. The following notes can be made.

sub 1. Demand is subject to certain fluctuations and trends.

Fluctuations in demand are caused by seasonal aspects, weather conditions and changes in prices of substitutes.

Trends of demand are caused by changes in consumption habits, due to: changes in real disposable income, growing consumers' knowledge of other preparation methods, and changes in the supply of other (possibly new) horticultural products. Fluctuations and trends can be observed in supplies as well.

Production is also subject to a seasonal pattern and weather conditions. Trends in production result from technical developments and increasing knowledge of growing techniques. An individual increase of the quantity produced does not affect prices. However, a general tendency in this direction increases supply and effects the price level.

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