excess supply
Excess Supply means more of something is on offer at a given price than buyers want, so it sits unsold until the price drops or the glut clears.
In plain English
By six in the evening at Mile 12, the tomato sellers are shouting themselves hoarse, and you can hear the panic creeping into their voices because the baskets are still stacked to the roof and the sun has done its worst to the fruit already.
Everybody planted tomatoes that season because the price had been sweet the year before, and now every farm from Kano to Jos is bringing baskets to market on the same market days, so there is simply more tomato in Lagos than Lagos knows what to do with.
That is excess supply in its rawest form. At the price sellers hoped for, buyers are not showing up in the numbers needed to clear the stock, so the sellers start cutting prices before the tomatoes cut them first, rotting away for nothing.
It happens far beyond tomatoes. When a Lagos landlord builds forty identical one bedroom flats in a neighbourhood that only needs fifteen rented out that year, rent stays flat or drops because nobody is desperate enough to fight over an empty flat.
In the United Kingdom, this shows up calmly in petrol stations during price wars, or in the housing market when too many new builds hit a town at once and estate agents start offering incentives just to get viewings.
The fix is rarely dramatic. Prices fall, some sellers hold back stock for another day, some producers calmly plant less next season, and slowly the market finds its balance again, the way it always does.
A trader buys 200 bags of rice expecting to sell each at ₦45,000, but three other traders bring in similar stock the same week. Buyers now have plenty of choice, so the price slides to ₦38,000 a bag before the rice starts moving again.
Questions people ask
What causes excess supply in the first place?
Usually sellers or producers misjudge demand, often because a previous season or a previous price made everyone rush to produce or stock the same thing at the same time, and buyers simply cannot absorb it all at that price.
Is excess supply always bad for the economy?
Not entirely. It is uncomfortable for sellers holding unsold stock, but it is good news for buyers, who enjoy lower prices, and it usually nudges the market back towards balance without anyone forcing it.
How is excess supply different from a shortage?
Excess supply is too much stock chasing too few buyers at a given price, while a shortage is the opposite, too many buyers chasing too little stock, and each pulls prices in the opposite direction.
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