Food Crisis

Only available on StudyMode
  • Topic: Poverty, Africa, 2007–2008 world food price crisis
  • Pages : 2 (592 words )
  • Download(s) : 123
  • Published : May 12, 2013
Open Document
Text Preview
How trade restrictions lead to food crisis?
According to World Bank, they blame that the food crisis in Africa are causing by trade barrier. A lot of countries in Africa are restricted importing food from the border. Due to unfertilized land in a lot of parts in Africa, it causes people to discourage to be a farmer, so the food supply is less. However, African population is increasing rapidly. Therefore, the demand for food will just keep increasing. As a result, the demand for food would exceed supply for food in Africa. Before I move on to the next examples, I need to explain about the result of the demand exceed supply. Identical products around the world should fix in the law of one price, which mean that the identical products should sell at the same price around the world. This is because if it is not the same price, the country that sell high price would go to buy the low price product from another country and sell it to their country. Therefore, the country that sell product for low price with get a result in increasing demand which result in increasing in price. The supply for the high price product will be more because people import to sell in country, which result in decreasing in price. At the result, both countries will sell product at the same price. This will cause the exporter by the rest of the world need to sell the product at the same price (world price). Therefore, we can draw it in the graph as vertical lines while the supply in the country as an upward-sloping and the demand is downward-sloping, but food is necessary product, so the line should be more inelastic. Now we can plot all of this in to a graph, and a graph will look like this.

The import is horizontal because of the world price, so they need to supply at this price. As you can see from the graph, the import is restrict at only the...
tracking img