Fynsa
I believe that there is no family, work colleagues, groups of friends or any set of people who talk to each other, in which there has not been a conversation about the price of potatoes. the price of potatoes. There has been such an uproar about their rise that there has even been an investigation into possible collusion in the marketThe price of potatoes has risen so much that there has even been an investigation into possible collusion in the market, especially the increases recorded after the heavy rains in August. Without wishing to doubt the knowledge of the commentators of the matinales who have installed those ideas, I get the feeling that there are some important points to consider before making such absolute accusations.
First of all, although it has attracted attention for its the evolution following the climatic events of the last few weeks, the price of potatoes has been rising for longer than this.The price of potatoes has been rising for longer than this. About a year ago, the price per kilo of this food was around $950, which remained relatively stable until the end of 2022. Since the beginning of the year, it began to increase in price, at a fairly low rate, reaching approximately $1,100 in March and remaining, with ups and downs, at this level until the beginning of June. It is at this point when the rate of increase accelerated notably, going from monthly increases averaging 1% to 2%, to variations of almost 4% in June, 16% in July and, according to our records, almost 20% in August. Thus, one of the most traditional foods on the national tables has doubled in price, surpassing $2,000 (averaging different sources of information). I do not doubt that you have seen it even over $2,500 per kilo, as we have records of that).
Price speculation is something that happens quite a lot in the food market after some supply shocks. We saw it, for example, for the earthquake. However, this is also related to difficulties in the distribution chain, storage and future production. Et is likely that the rains have not affected potato production in the field, but have made its distribution difficult, due to road closures, or its storage (if the potato gets wet, it may sprout, and can no longer be marketed). All this operates as a reduction in supply, increasing prices through reduced availability. In all the cases we have seen this (it was quite repeated last decade with lemons) the price ended up normalizing as abruptly as when it had risen. We also have seasonal increases (tomato and onion, for example, during national holidays), in which case the price increases, but also its availability, since the cause is a temporary increase in demand. Afterwards, the price also tends to normalize quickly.
Collusion in such an atomized market is unlikely. Additionally, it is a product that is difficult to differentiate, without high entry barriers and where efforts to reach a collusive agreement would be important. Moreover, the incentives to deviate from the agreement are also high, reducing the probability of occurrence. As the chain progresses, the number of players decreases and the probability of an agreement increases, but it also seems unlikely given that there are still quite a few of them. Last but not least, let us remember that agreements are usually to keep prices high and not to cause a temporary increase in prices.
Let's see how this evolves. I am not closing my mind to anything and those who know more about this very specific market will have a lot more to say. I am just stating the facts and what the theory says about it. I just hope that these rises do not continue to mash the monthly budget (turum tss).
