The prices for many seasonal vegetables have dropped considerably this month in the capital of Nepal, Kathmandu. Most common vegetables that are seasonal in the region have dropped between 22% and nearly 50% in price. Many other vegetables have also seen a significant cost decrease compared to previous months, January and early February.
This is due to very bountiful vegetable harvests resulting in an increase in supply. This supply increase has flooded the Kathmandu markets with a larger than normal quantity of vegetables. The decreased cost of factors of production is responsible for this supply increase, because the farming conditions in Nepal allowed for a greater harvest of vegetables while using less or the same resources. As a result of the surplus in vegetables, the supply curve of the relationship between supply and demand shifted to the right. This subsequently caused a decrease in the equilibrium price as can be seen in the chart below.
Furthermore, there may be an increase in the demand for vegetables in the near future due to buyer’s expectations. As buyers expect the price of vegetables to increase to their previous prices in the future.
(Ms. Cuttle I just realized that I forgot to add the link, I hope you haven’t marked mine yet. Sorry.)