There has been a superb growing season and the quantity of tomatoes supplied exceeds the quantity demanded. what is likely to happen to the price of tomatoes?

Bởi United States. Congress. Senate. Committee on Agriculture and Forestry

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We have been trying out the International Wheat Agreement. We also have been working with others in the case of sugar. Is the international agreement adaptable to other cominodities and to perishable commodities? Should the United States depend for protection for its producers on quotas, embargoes, tariff's, and all those other things which a lot of people believe the United States leads the world in but actually we trail the rest of the world in in the matter of trade restrictions.

And you know what the situation is here. Senator Holland, whose people in Florida are very much interested in this matter, is here this morning. And the Chair is glad to note the presence of Senator Barry Goldwater of Arizona. We are glad to have you here.

Senator GOLDWATER. Thank you.

The CHAIRMAN. We would be glad to have you take part in any questioning that you desire to do.

Now, Mr. Martin, we will be glad to hear from you concerning this problem which has brought you to Washington.

Mr. Martin. Well, would you like for me to read this statement? I think the committee probably has a copy of it.

The CHAIRMAN. Unless it is easier for you to read this, why don't you submit the statement to the committee and then go ahead and tell us the story in your own way. If it is easier to read the statement, read it. Otherwise, we will just listen to what you have to say.

(Statement filed by George R. Martin, secretary-manager, West Coast of Mexico Vegetable Association of Nogales, Ariz., is as follows:)

NOGALES, ARIZ., June 11, 1953. The COMMITTEE ON AGRICULTURE AND FOR ESTR Y OF THE UNITED STATES SENATE,

Washington, D. C. GENTLEMEN: As a supplement to our statement of May 25, 1953, made in connection with the hearings on export-import policy we wish to make this additional statement and to attempt to clarify some apparent inconsistencies in the former statement.

Your chairman, Senator George D. Aiken, wrote that on page 1 we imply, that our trade with Mexico in tomatoes has grown greatly due to the Reciprocal Trade Agreement Act. It was not our intention to imply that our trade with Mexico in tomatoes has grown greatly due to the act, but rather that our trade with Mexico in all commodities had greatly increased since enactment of the act. Our trade with Mexico in tomatoes has increased since the year 1942, but several factors are involved in that increase, principally the war, improved economic conditions in the United States and, to some extent, an increase in the population in the United States. Our trade with Mexico in tomatoes has been at a high level for the 10 years since 1942, but does not represent a great increase as compared with the predepression years from 1926 to 1932.

As the table on page 4 of our previous statement did not give carlot shipments of exports from Mexico beyond the season 1945–46, we are giving below comparative carlot shipments of tomatoes from Florida, and imports of tomatoes from Mexico, for the seasons 1941-42 through 1952–53. Comparisons of shipments and imports in pound figures for several years were given on page 8 of our statement of May 25.

The supply curve is a graphic representation of the correlation between the cost of a good or service and the quantity supplied for a given period. In a typical illustration, the price will appear on the left vertical axis, while the quantity supplied will appear on the horizontal axis.

• On most supply curves, as the price of a good increases, the quantity of supplies increases.
• Supply curves can often show if a commodity will experience a price increase or decrease based on demand, and vice versa.
• The supply curve is shallower (closer to horizontal) for products with more elastic supply and steeper (closer to vertical) for products with less elastic supply.

The supply curve will move upward from left to right, which expresses the law of supply: As the price of a given commodity increases, the quantity supplied increases (all else being equal).

Note that this formulation implies that price is the independent variable, and quantity the dependent variable. In most disciplines, the independent variable appears on the horizontal or x-axis, but economics is an exception to this rule.

If a factor besides price or quantity changes, a new supply curve needs to be drawn. For example, say that some new soybean farmers enter the market, clearing forests and increasing the amount of land devoted to soybean cultivation. In this scenario, more soybeans will be produced even if the price remains the same, meaning that the supply curve itself shifts to the right (S2) in the graph below. In other words, supply will increase.

Technology is a leading cause of supply curve shifts.

Other factors can shift the supply curve as well, such as a change in the price of production. If a drought causes water prices to spike, the curve will shift to the left (S3). If the price of a substitute—from the supplier's perspective—such as corn increases, farmers will shift to growing that instead, and the supply of soybeans will decrease (S3).

If a new technology, such as a pest-resistant seed, increases yields, the supply curve will shift right (S2). If the future price of soybeans is higher than the current price, the supply will temporarily shift to the left (S3), since producers have an incentive to wait to sell.

Should the price of soybeans rise, farmers will have an incentive to plant less corn and more soybeans, and the total quantity of soybeans on the market will increase. 

The degree to which rising price translates into rising quantity is called supply elasticity or price elasticity of supply. If a 50% rise in soybean prices causes the number of soybeans produced to rise by 50%, the supply elasticity of soybeans is 1.

On the other hand, if a 50% rise in soybean prices only increases the quantity supplied by 10 percent, the supply elasticity is 0.2. The supply curve is shallower (closer to horizontal) for products with more elastic supply and steeper (closer to vertical) for products with less elastic supply.

The terminology surrounding supply can be confusing. "Quantity" or "quantity supplied" refers to the amount of the good or service, such as tons of soybeans, bushels of tomatoes, available hotel rooms, or hours of labor. In everyday usage, this might be called the "supply," but in economic theory, "supply" refers to the curve shown above, denoting the relationship between quantity supplied and price per unit.

Other factors can also cause changes in the supply curve, such as technology. Any advances that increase production and make it more efficient can cause a shift to the right in the supply curve. Similarly, market expectations and the number of sellers (or competition) can affect the curve as well.