Agriculture

Most economists recognise that this sector has specific characteristics that set it apart from others. The sector suffers from being both cyclical and close to the traditional concept of a perfectly competitive market. There is a tendency for both oversupply and undersupply arising from crop and animal production cycles and from farmers’ lack of information or ignorance about what the market will actually bear in a particular season. At the consumer end, overproduction can be a good thing in that it can lead to lower prices. However overproduction can also lead to underproduction in the next season as farmers adjust their efforts, with consequences for prices that are not so attractive.