Lack of farmhands pushes prices up

              Based on the article I selected from New Straits Times, http://www.nst.com.my/streets/northern/lack-of-farmhands-pushes-prices-up-1.53281, the productivity of vegetables in Cameron Highlands had decreased due to one of the factor of production which is number of foreign labor from Bangladesh. The Home Ministry had announced that they put a ban in order to reduce to employ the Bangladeshis’ labors in the plantation sector. The productivity of vegetables influenced by this news and farmers need to push up the price of vegetables in the market now.

When the farmers are lack of farmhands, they have not enough farmhands to supply the vegetables at Cameron Highlands so the supply curve will be shifted to left. Thus, the productivity of vegetables dropped drastically and the prices of vegetables have been push up. The diagram below shows the shifting of supply curve from S1 to S2 when the lack of farmhands happens.

            In my view towards this issue, the farmers at Cameron Highlands can hire the workers from other countries such as the workers from Indonesia instead of waiting of the ban put by the Home Ministry to be removed. This is because they cannot predict that when the ban will be removed so it is better for the farmers to search for the workers from other countries as well. The workers from other countries also had the skills and patience on producing the vegetable in the plantation sector after they are trained by the farmers. At the same time, the farmers have enough workers to supply the vegetables in order to meet the demand of consumers.

            However, if the farmers push up the price of vegetables in the market, the firms will worse off. This is because the consumers will seek for the substitute of vegetables to meet their consumption satisfaction when the price of vegetables is high but not to continue consumes the vegetables from Cameron Highlands. Therefore, the firms push up the price of vegetables is directly influence their market at Cameron Highlands.   

            I will suggest that the farmers that make some adjustment in term of the resources such as number of workers and buying additional tools to help in produce the vegetables at Cameron Highlands during the short-run supply. They can take in more local and foreign workers to work in the production as well. Therefore, in the short-run supply, farmers can still slightly make some resources adjustment so they able to meet the demand of vegetables from the consumers but not to push up the prices. In the long run, farmers can make more resources adjustment such as obtain more resources from other firms. Besides that, the workers are now well trained by the farmers in the plantation sector after several years. Then, they have more resources include tools and workers to produce the vegetables now.

On my side, I think that there are still have other reasons that push the price of vegetables to go up in the market. Besides the lack of farmhands, a bad weather also can cause the price to be increased and shift the supply curve to the left. As an example, if there had occurred drought during the production, it may affect the speed of the production to be slow and the supply curve will shift to left. On the other hand, the demand curve do not shift to left or right because the consumers will have the same desire to consume the vegetables no matter the weather has changes. In my opinion, the bad weather had caused the farmers less produce the production of vegetables at the original old price.

For an example, the original equilibrium price for the vegetables is RM5 and the equilibrium quantity is 50 packs. When the drought occurs, it affects the speed of production so the producers tend to produce fewer vegetables, then the supply curve will shift from S1 to S2. After the supply curve shifted to the left, the new equilibrium price will be RM8 and the new equilibrium quantity is 30 packs now. Thus, a bad weather can be one of the reasons why the prices had been push up except the reason of farmhands. The example is show as the diagram below. 

Another factor that influences the price of vegetables to be increased is the expected future value for the vegetables in the market. If the expected future value of vegetables is high in the future, the supply of the vegetables for today will be decreased because the producers will decide to produce more in the future but not produce more now. Hence, the supply curve is shifted to left when the producers decide to produce fewer vegetables.

For an example, the original equilibrium price is RM6 per pack for the vegetables and the equilibrium quantity is 40 packs. As the expected future value for the vegetables will be higher in the future compared with now, the producers decide to produce fewer vegetables so the supply curve is shift from S1 to S2. The new equilibrium price for vegetables is RM10 per pack and the new equilibrium quantity is 20 packs. The diagram below shows that expected future value for the vegetables is one of determinants that cause the price to be push up. 

When the price of vegetables at Cameron Highlands had increased, we can see that the quantity of vegetables had decreased so it actually brings some effect on the producer and also the consumer. On the producer’s side, they will earn less revenue or income because when the price of vegetables push up, the consumer will not consume as much as before. On the consumer’s side, as the price of vegetables increases, they may seek the substitute of vegetables such as fruit in order to meet their consumption satisfaction in their daily life.

            Lastly, the main issue in this article is about the price of vegetables at Cameron Highlands had been push up due to the problem of lack of foreign workers from Bangladesh. I will like to suggest that the farmers can seek for other solutions to solve this situation. There are also still have other reasons that has cause the price of vegetables to be push up which are the bad weather and the expected future value for vegetables. A few effects had been affect the producer and consumer when the price of vegetables had been push up.