Cobweb Phenomenon

  • An abundance of the produce has led to a crash in prices.
  • If it is tomatoes in Karnataka, it is red chillies in Andhra Pradesh and Telangana, and tur and grapes in Maharashtra.
  • While most farmers complain about the poor remuneration for their produce in comparison to the prices that prevailed in the previous season, agricultural economists have traced the reasons for the glut and the resultant price crash to the “cobweb phenomenon.”
  • After the prices of a particular agricultural commodity shoot through the roof during a season of scarcity, farmers resort to boosting the production on the premise of the pre-existing demand and prices, leading to a problem of plenty. This is the cobweb phenomenon.
  • Most of the agricultural products that have now suffered a price crash due to their abundance had yielded a rich dividend in the previous season.

Source: The Hindu

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