DEFINITION OF TERMS

Consumer. An individual who buys product or services for personal use.

Price. The amount of money spent to buy foods or product.

Impact. Effects of the inflation to the buyers.

Preference. The settling of the claims of one or more creditors before to the exclusion of
those of the others.
 CONCEPTUAL FRAMEWORK

THE IMPACT OF INCREASING PRICES OF VEGETABLES TOWARDS THE CONSUMERS

Poverty

Money
Profile
Management

INCREASING
PRICE

Inflation is a persistent increase in the general price level of goods and services in an
economy over a period of time.
REVIEW OF RELATED LITERATURE

After many years of relatively stable cereal prices on world agricultural markets,
there have been several large price spikes in the past few years. This price volatility has
drawn the attention of ordinary citizens, the media, government, and international
organizations around the world. Honrao (2014) made a research on vegetables like onion
and tomato in India found that price volatility estimated as the predictable variance is
found to have increased after 2007 production year. The agricultural output was also
adversely affected by deficient rainfall in the first two months of the monsoon period of
June to September. By and large, the high rate of overall inflation and particularly onion
inflation caused by weather change witnessed during 2011 and 2013 production years. An
increase in the price of fruits and vegetables relative to less healthy foods could reduce
consumers’ incentives to purchase fruits and vegetables and result in less healthy diets
(Fred, Hayden, 2008).

Fruit and vegetables (FV) are considered an important proxy for healthy eating and
determinant of health. A diet low In fruit was found to be the most important dietary
contributor to mortality and lost years of healthy life, and a diet low in vegetables the
forth contributor (Forouzanfar et al., 2015). Food intake quantity and nutritional content of
food. Many empirical studies have verified that a positive correlation exists between
income and nutritional intake (Ward and Sanders, 1980; Bunch and Hall, 1983; Bhargava,
1991), that is, income has a positive impact on nutritional intake.

According to Food and Agriculture Organization (FAO, 2012), some degree of price
volatility is typically observed in agricultural commodity markets due to three market
fundamentals: Agricultural output varies from period to period because of natural shocks
such as weather events (droughts, floods, etc.) and pests and diseases; since agricultural
product demand and supply are inelastic In the short-run, wide price adjustments may be
necessary to clear markets, especially where stocks are low; and as production takes
considerable time in agriculture, supply cannot respond much to price changes in the
short term, unless stocks are available somewhere to counter changes in production.

Vegetables are perishable in nature and cannot be stored for longer periods,
which result in very sensitive and complicated trading of these horticultural commodities
and exposing big challenges to suppliers, processors and traders (Ahmad and Feher, 2009).
But intermediaries are essential part of vegetables supply chain in Bangladesh. They share
profit with producer. But farmer in Bangladesh cannot avoid intermediaries’ for shifting
their product to market (Das and Hanaoka, 2010).
 In countries where social sector ministries are weak and lack capacity, their
bargaining power with more powerful Ministries of Finance and or Ministries of Planning
etc. tends to be low. In a context of scarce national resources, it may be that in
response to the high costs associated with the spike in food prices, the government’s
ability to provide public services may be reduced. If income support (such as cash
transfers or pensions) to households is not price index-linked then the value of the
transfer will erode in the face of soaring food prices. The food price spike is likely to
reduce the ability of governments to spend on social services since rising food import
bills tend to deflate the economy and with that revenue collection. (Wiggins and Levy
2008).

In the Philippines, many have been adversely affected by the food inflation. For
example, it was reported that garbage scavengers in the impoverished Manila area of
Tondo were increasingly looking for food to feed their families among rubbish (Cabrera,
2008). The overall impact of the inflation, however, is not obvious, because the increased
food prices may benefit net sellers of food, some of who are poor. Hence, it is likely
that the inflation of food prices has benefited at least some of the rural farmers whereas
most of the urban poor have been adversely affected. Given that poor people often take
inflation as one of the top concerns (Easterly and Fischer, 2001).

According to the estimates in World Bank (2008), the poverty rate using the
international poverty line of one dollar per day per capita in purchasing power parity
dropped from 13.5 percent in 2000 only to 13.4 percent in 2006 in the Philippines. In
comparison, the proportion of people living under the same poverty line dropped during
the same period from 15.4 percent to 7.7 percent in China, 9.9 percent to 8.5 percent
in Indonesia, 5.2 percent to 1.8 percent in Thailand, and 15.2 percent to 4.9 percent in
Vietnam. In these countries, the number of poor people also diminished. However, it
increased in the Philippines because the population grew as much as 14 percent
between 2000 and 2006—about three times higher than the regional average of East
Asia and the Pacific—during the period of time when poverty rate declined very little.