Orange prices per kg have been steadily increasing over the past few years. While this increase may seem relatively small, it significantly impacts consumers and producers. The key to understanding why orange prices have increased so much is understanding their supply and demand.
Supply and demand drive the orange prices per kg. As the supply of oranges increases, more oranges are available for people to buy. This means that the price will lower until supply and demand are at equilibrium again.
Similarly, as the demand for oranges increases, more people want oranges than there are oranges available for them to buy. As a result, the price will rise until demand meets supply again. FrutPlanet will help you understand these variations. Additionally, we help you in marketing your products, making sales, and ensuring you receive your payment.
Factors Affecting Orange Supply and Their Impact on Prices
As a business owner, keep an eye on the following factors to be on the right side of the supply chain:
Various weather impacts the supply and orange prices per kg differently. Oranges thrive well in warm climates. When the temperatures are favorable, the supply of oranges increases, and the orange prices per kg go down. Oranges thrive well in temperatures between 24-34 degree Celsius.
When temperatures drop below freezing point, orange trees don’t produce fruits. For instance, varieties like navel oranges are sensitive to cold temperatures because their buds are located inside the truck of their tree and not on the branches. As a result, the orange supply decreases, and prices rise.
Additionally, extremely high temperatures hurt the orange prices per kg. Such temperatures destabilize the oranges’ membrane and cause oxidative damage. As a result, you’ll yield a smaller fruit size.
High production costs lead to low profits at any given orange price per kg. This means, orange growers may produce oranges in small quantities at any given price. As a result, the supply curve will shift to the left, meaning a decrease in supply.
However, lower production costs mean more profits at any given orange price per kg. As a result, orange farmers will produce more and the supply curve will move to the right.
Production costs include the following:
- Land rent: This is the cost of renting land from someone else who owns it.
- Labor: This is the cost of hiring workers to plant, tend, and harvest crops.
- Materials: These are fertilizers, pesticides, and seeds used to grow crops like oranges.
You don’t have to suffer substantial production costs when you have FrutPlanet. Our experts will work with you every step of the way to ensure you get the best orange prices per kg.
Technological advances affect the supply of oranges in two ways. First, more oranges are available because the cost of producing an orange has been reduced. Secondly, there are more varieties of oranges to choose from, hence the lower orange prices per kg.
Factors Affecting Demand and How They Influence Prices
The demand for oranges depends on several factors, including
Consumer preferences affect the demand for oranges. Consumers are willing to pay more for a product if it satisfies all their needs better than other products. For example, a customer may be willing to buy a small orange with more nutritional value at a higher price than buy cheap, bigger ones with no or less nutritional value.
A change in consumer preference shifts the demand curve to the right or left. Hence, changing the quantity demanded at each price point.
The demand for oranges is a function of income levels. As income increases, so does the demand for oranges (the higher one’s income, the more likely they are to purchase an orange). As income decreases, so does the demand for oranges (the lower one’s income, the less likely they are to purchase an orange).
The equilibrium price of an orange is where supply equals demand. If there are too many oranges on the market, some people may decide not to sell their excess supply of oranges because they would make more money by holding onto them instead. In this case, we would see a surplus in orange supply and a shortage in orange demand. This would cause prices to fall until they reached equilibrium again, with equal amounts being supplied and demanded.
You have to partner with the best for fast and efficient orange exports. FrutPlanet is your go-to company. We export top-notch quality from Kenya to Australia, the Middle East, and other parts of the globe. Contact us today and enjoy efficient services from our experts.