Which circumstance is most likely to cause a farmer to store soybeans for future sale instead of selling them right after harvest?

Inflation is running at 25 percent.

The government imposes an excise tax effective next year.

The government lifts restrictions on the importation of soybeans.

A new technology decreases the chance of rot.

1 answer

The circumstance most likely to cause a farmer to store soybeans for future sale instead of selling them right after harvest is inflation running at 25 percent.

When inflation is high, the purchasing power of money decreases over time. As a result, farmers might anticipate that the price of soybeans will rise in the future, making it more beneficial to store the soybeans until prices increase rather than selling them immediately after harvest when prices might be lower.

Other factors, like the imposition of an excise tax next year or lifting import restrictions, may also influence decisions, but they would not have as strong an incentive for storage compared to high inflation expectations. The new technology decreasing the chance of rot would primarily affect the quality and durability of storage but would not inherently motivate holding crops if other economic factors suggest selling now might be preferable.