Explanation Is Needed
Why would a certain product that used to cost a certain price in a previous point in time would cost higher when buying it at a latter date? In the world of manufacturing so many things could trigger the rise in price. The material cost could go up because the retrieving cost of the material that goes into the product could go up for reasons such as higher wage demand by employees, higher taxes by local governments, higher excise taxes by the importing countries, higher transportation cost because of high gas price etc. which all can have a domino effect and could result in hiking up prices of goods. In fact, one of the reasons why there will be recession in the advanced countries that have a plethora varieties and amount of goods and services could be because of this main reason. At the beginning there will always be a recession that will slowly become a boom where everyone will start making money and will have lots of disposable income they can spend on buying goods and services. Eventually, what would change such a pleasant atmosphere always is, whether it is greed or a natural order that has to come around, businesses will continue to raise their price to soak up the excess money that is floating around since it is a boom and everyone is making more money. At one point, consumers would find the price hike to be too high and would slowly decrease their spending, which will affect business directly, because whatever they are coming up with does not have a large number of buyers, similar to when they were pricing their goods reasonably. When they cannot sell their goods and services it does not make sense to keep employees because they cannot afford to pay them, then what is known as layoff would become common. When businesses fail to show profit for two consecutive quarters that will be the harbinger of recession or it is possible to say an economy is in a recession.
Something like this had happened in the USA, for example, where the housing price was reasonable at the start and people were buying everywhere. But that price would not stay at a given level since it will start creeping upwards and people will start to stop buying to the point where there will not be anyone who wants to buy houses anymore even if there are many willing sellers who would want to sell their houses for various reasons. The only way they can sell their houses would be by bringing down the price and once that spiral had started the price of properties will start going down fast and those who want to come out of their mortgaged arrangement for various reasons, such as losing their job have no choice other than selling at the lower price that will erode the equity in their property. When that is the case people cannot pay their mortgage because they have lost their jobs and there is so much low price they can accept. In a situation like this the only alternative they have would be to stop paying their mortgages that would be followed by disclosure and this could happen in a big number around the country, and this had taken place, more or less, in the USA where lenders ended up having properties no one wants to buy and that became to be known as toxic assets.
But when we look at food prices especially livestock it is difficult to say why they should cost as much as they are costing in Ethiopia. A rooster could fetch between 70-100 bir while sheep could cost as much as 1000 bir in a country where the average salary earner could be making between 400-500 a month. Even if people are making 1000 bir a month paying their one month salary for one food item is unacceptable. The question now is livestock are still eating the same staple from time immemorial unless their breeders want to feed them different kinds of feeds as it is done in the advanced countries, and that could cost more money that should be passed to the buyers. In our country the feed for the livestock is grass and they drink water mostly from rivers, lakes, and springs in some cases. The price of those items or their availability had not been altered, because if there is drought the particular region affected will find it difficult to raise livestock since the water and the greenery would disappear and such a region or community would be dependant on the aid it gets from outside sources such as the government or other sources such as the UN or other foreign governmental agencies, because in almost all cases they will lose their livestock for the calamity.
However, if there is one thing that might make the livestock traders sell their animals for such a high price it might be demand and supply, where because of the high population there is shortage. In a situation like this the reason why the price should go high while the other factors the livestock are dependant upon for existence such as grass and water remains the same is the profit motive where they want to make as much as possible out of the dreary situation. It is difficult to say it is right or wrong, because at one point, when the buyers cannot afford the price and cannot buy what the livestock traders are asking, they have either to bring down the price or they will continue to do as they are doing currently, where they would complain about the lack of buyers since they fail to sell as much as they wanted, with the exorbitant price they are charging. The outcome here is there is a natural mechanism that will provide a correction, which is the inability of the buyers to pay the money they are asked. No one who is working in the country and is being paid what the average salary is cannot afford to pay the above mentioned prices whether it is for the holidays or for the regular days and to make things worse the body needs a certain amount of protein in order to function properly.
All kinds of food items that are source of protein and other essential minerals such as calcium and vitamins are costing the same exorbitant price, where, for example, a recent article that originated from the country had stated that a single egg could cost more than 1.45 bir, which is still cheap by some Western countries standard. Because a carton of 12 eggs might cost between $2-$3 depending where it is bought, showing that the price in Ethiopia is still cheaper. The same applies to butter where one kilo costs 100 bir. The problem here is it does not make economic sense, because when charging for a product or service what should be taken into account is the cost incurred to bring that product or service into the market. As it was discussed earlier since grass and water are things that occur naturally, and if there is a need to buy hay it should not cost that much since it has to be priced according to the nation’s standard.
If there is a problem here, the traders back in the country are trying to take full advantage of the situation by charging, it is difficult to say how many times more than the cost they are incurring. Because if there was shortage and their price was reasonable they would not say that they cannot sell what they brought into the market, but the reality is there is excess livestock no one can afford to buy. They should know what kind of salary people are getting in the first place and then they should take into consideration the cost they are incurring to bring the livestock into the market. On top of that they are expected to make a certain amount of profit that is reasonable for the standard of the people who need what they are bringing into the market for survival, not luxury.
The question that should be raised here is there might be a need for some kind of government intervention where these traders should be approached by the authorities to explain why they are charging such a high price. One incident in the article had shown that a trader who demanded 800 bir for a sheep had agreed to bring it down to 350 bir showing that he could be making a huge profit even selling for 350 bir, while maybe between 30-50 bir could have covered his cost and gives him a reasonable profit. When that is the case, everyone would be happy, and individuals will not be forced to go without what they need in order to lead a healthy and productive life.
This means that there must be something that should give where, for example, the government should have a hand in supplying the nation with what it needs in a form of livestock, because the possibility is the market had been manipulated and abused by greedy traders. The accumulation of such failures in the part of the government in office will make it look bad, since it seems that they really do not care about the public, while they could also be robbing the same public by selling them fertilizers for a very high and exorbitant price, the reason why they would be forced to turn a blind eye to what the traders are doing.
Some sources had highlighted that most of the projects that had been undertaken, in the country, especially in a form of constructing housing are out of the reach of the people, because earning 1000 bir might not come easy for everyone since the average earning in the nation is half of that. As election approaches, these kinds of shortcomings could become good ammunition for the opposition, because anyone who is in charge of running the country has to face such realities where even if the people want many things in order to raise their standard of living, without the basics such as proper diet, their existence would harbor hardship, not to mention that their life expectancy and health would be badly affected and could have a repercussion for generations to come. Any future government that cannot come up with a quick solution for the problems that are plaguing the people because of the farming system that has become not only dysfunctional, but it is trying to make profit at the expense of the normal existence of the citizens should be sent packing.
Something like this had happened in the USA, for example, where the housing price was reasonable at the start and people were buying everywhere. But that price would not stay at a given level since it will start creeping upwards and people will start to stop buying to the point where there will not be anyone who wants to buy houses anymore even if there are many willing sellers who would want to sell their houses for various reasons. The only way they can sell their houses would be by bringing down the price and once that spiral had started the price of properties will start going down fast and those who want to come out of their mortgaged arrangement for various reasons, such as losing their job have no choice other than selling at the lower price that will erode the equity in their property. When that is the case people cannot pay their mortgage because they have lost their jobs and there is so much low price they can accept. In a situation like this the only alternative they have would be to stop paying their mortgages that would be followed by disclosure and this could happen in a big number around the country, and this had taken place, more or less, in the USA where lenders ended up having properties no one wants to buy and that became to be known as toxic assets.
But when we look at food prices especially livestock it is difficult to say why they should cost as much as they are costing in Ethiopia. A rooster could fetch between 70-100 bir while sheep could cost as much as 1000 bir in a country where the average salary earner could be making between 400-500 a month. Even if people are making 1000 bir a month paying their one month salary for one food item is unacceptable. The question now is livestock are still eating the same staple from time immemorial unless their breeders want to feed them different kinds of feeds as it is done in the advanced countries, and that could cost more money that should be passed to the buyers. In our country the feed for the livestock is grass and they drink water mostly from rivers, lakes, and springs in some cases. The price of those items or their availability had not been altered, because if there is drought the particular region affected will find it difficult to raise livestock since the water and the greenery would disappear and such a region or community would be dependant on the aid it gets from outside sources such as the government or other sources such as the UN or other foreign governmental agencies, because in almost all cases they will lose their livestock for the calamity.
However, if there is one thing that might make the livestock traders sell their animals for such a high price it might be demand and supply, where because of the high population there is shortage. In a situation like this the reason why the price should go high while the other factors the livestock are dependant upon for existence such as grass and water remains the same is the profit motive where they want to make as much as possible out of the dreary situation. It is difficult to say it is right or wrong, because at one point, when the buyers cannot afford the price and cannot buy what the livestock traders are asking, they have either to bring down the price or they will continue to do as they are doing currently, where they would complain about the lack of buyers since they fail to sell as much as they wanted, with the exorbitant price they are charging. The outcome here is there is a natural mechanism that will provide a correction, which is the inability of the buyers to pay the money they are asked. No one who is working in the country and is being paid what the average salary is cannot afford to pay the above mentioned prices whether it is for the holidays or for the regular days and to make things worse the body needs a certain amount of protein in order to function properly.
All kinds of food items that are source of protein and other essential minerals such as calcium and vitamins are costing the same exorbitant price, where, for example, a recent article that originated from the country had stated that a single egg could cost more than 1.45 bir, which is still cheap by some Western countries standard. Because a carton of 12 eggs might cost between $2-$3 depending where it is bought, showing that the price in Ethiopia is still cheaper. The same applies to butter where one kilo costs 100 bir. The problem here is it does not make economic sense, because when charging for a product or service what should be taken into account is the cost incurred to bring that product or service into the market. As it was discussed earlier since grass and water are things that occur naturally, and if there is a need to buy hay it should not cost that much since it has to be priced according to the nation’s standard.
If there is a problem here, the traders back in the country are trying to take full advantage of the situation by charging, it is difficult to say how many times more than the cost they are incurring. Because if there was shortage and their price was reasonable they would not say that they cannot sell what they brought into the market, but the reality is there is excess livestock no one can afford to buy. They should know what kind of salary people are getting in the first place and then they should take into consideration the cost they are incurring to bring the livestock into the market. On top of that they are expected to make a certain amount of profit that is reasonable for the standard of the people who need what they are bringing into the market for survival, not luxury.
The question that should be raised here is there might be a need for some kind of government intervention where these traders should be approached by the authorities to explain why they are charging such a high price. One incident in the article had shown that a trader who demanded 800 bir for a sheep had agreed to bring it down to 350 bir showing that he could be making a huge profit even selling for 350 bir, while maybe between 30-50 bir could have covered his cost and gives him a reasonable profit. When that is the case, everyone would be happy, and individuals will not be forced to go without what they need in order to lead a healthy and productive life.
This means that there must be something that should give where, for example, the government should have a hand in supplying the nation with what it needs in a form of livestock, because the possibility is the market had been manipulated and abused by greedy traders. The accumulation of such failures in the part of the government in office will make it look bad, since it seems that they really do not care about the public, while they could also be robbing the same public by selling them fertilizers for a very high and exorbitant price, the reason why they would be forced to turn a blind eye to what the traders are doing.
Some sources had highlighted that most of the projects that had been undertaken, in the country, especially in a form of constructing housing are out of the reach of the people, because earning 1000 bir might not come easy for everyone since the average earning in the nation is half of that. As election approaches, these kinds of shortcomings could become good ammunition for the opposition, because anyone who is in charge of running the country has to face such realities where even if the people want many things in order to raise their standard of living, without the basics such as proper diet, their existence would harbor hardship, not to mention that their life expectancy and health would be badly affected and could have a repercussion for generations to come. Any future government that cannot come up with a quick solution for the problems that are plaguing the people because of the farming system that has become not only dysfunctional, but it is trying to make profit at the expense of the normal existence of the citizens should be sent packing.
posted by Ethio-Probe @ 6:46 AM
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