CAEE 5131 - Agricultural Marketing and Price Analysis
Storage of agricultural commodities
Storage of agricultural commodities is so critical due to imperfect coordination between supply and demand. Storage operations are necessary to bridge the time gap between periodic harvests and marketings and the relatively stable consumption of agricultural commodities on a year round basis. Agricultural commodity stock can be classified into working inventory stocks, seasonal stocks, carryover stocks, buffer stocks and speculative stocks. While working inventory are maintained for convenience and efficiency of marketing, seasonal stocks are held to balance out supply and demand. For example maize is consumed as a staple food in Kenya throughout the year, but production is seasonal thus necessitating storage during surplus period. Carryover stocks refer to the amount of commodity left over from one marketing year to the next. Carryovers then become part of supply in the following year. Reserve or buffer stocks are intended to balance commodity supplies with demand over the long run and between surplus and deficit areas. Finally, speculative stocks are stocks held by farmers, marketing firms and consumers in larger than normal quantities when they expect prices to rise.
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This module was developed by Moi University, Department of Economics and Agricultural Resource Management with support from OER Africa and Bill & Mellinda Gates Foundation