Pan-territorial and pan-seasonal pricing for maize in Zimbabwe
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Agricultural prices are seldom left to the marker mechanism, regardless of the political system or level of development. This intervention in the price which would be established by unfettered supply and demand is motivated by more than existing market imperfections. The biological nature of the agricultural production process is a major factor in government intervention. Actual and planned supply are rarely the same; there are significant lags between the planning of production and the eventual supply of the commodity. Prices are unstable both within and between seasons and may involve cycles which move away from, rather than towards equilibrium—even under conditions of perfect competition. The situation is aggravated by the fact that because most agricultural commodities are necessities, they have a relatively inelastic demand. This means that fluctuations in supply will result in more than proportionate fluctuations in price. Much of the intervention is thus aimed at stabilizing domestic supplies and prices. Food security, income redistribution, and reallocation of resources are other major objectives.