Preview

How Weather Can Affect Food Prices (Simple Supply and Demand)

Good Essays
Open Document
Open Document
662 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
How Weather Can Affect Food Prices (Simple Supply and Demand)
How weather can affect food prices

Diagram 1 - supply and demand: P = Price
Q = Quantity
D = Demand
S = Supply
Q₁, P₁ = Original equilibrium
Q₂, P₂ = New equilibrium

Diagram
The main factor that I will focus on in this price shift is the weather. That is because the weather is one of the most important factors when it comes to agriculture. As you can see in the diagram above; when the supply decreases there will be a lack of food (shortage) which will result in enormous price risings. But one important thing to notice is that the demand is slightly decreased. This is because food is inelastic. What inelasticity means is: “When a price change has no effect on the supply and demand of a good or service, it is considered perfectly inelastic. An example of perfectly inelastic demand would be a life saving drug that people will pay any price to obtain. Even if the price of the drug were to increase dramatically, the quantity demanded would remain the same” [1]. Evaluation
One thing to have in mind is that there is always billions of other factors that effects the prices of food, not just the weather. A few other factors are - but not limited to - the rising prices of oil and transport, the lowered production [2] of grain, the increase of the world population and the production of ethanol [3]. All these factors have together caused the price of corn to double in the past year, the price of wheat has been increased by 70% and the price of soybeans has been increased by 50% [4]. Just to point out, there will not be a winner in neither the short nor the long run of the food crisis - this applies to everyone; governments, companies, stakeholders etc. How does this affect people around the world today?
We, westerners, who live our rich lives will not be affected by the raising prices other than that we will complain a bit while shopping in our air



References: 1. http://www.investopedia.com/terms/e/inelastic.asp 2. http://www.truth-out.org/rising-prices-changing-climate67967 3. http://www.technologyreview.com/energy/18173/ 4. http://www.fox2now.com/news/ktvi-us-food-prices-oil-mid-east-china-india-022111,0,3465470.story 5. http://www.smh.com.au/opinion/politics/a-new-food-crisis-is-on-our-plates-20110221-1b2f3.html 6. http://www.guardian.co.uk/business/2010/jun/15/food-prices-rise-un-report

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Gm 545 Project 1

    • 382 Words
    • 2 Pages

    Based on these two events food prices in the U.S. will increase due to a diminished supply. Other suppliers of oranges will have more of their supply purchased however it won’t do much as far as keeping prices low. The same holds true with corn prices with some of the supply of corn going towards the production of ethanol. However, unlike the oranges, corn supply will affect almost all food from meat prices to other products that use corn while being produced. As a result of this decrease in available supply of corn, food prices across the board are up.…

    • 382 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Due to this shortage on supply the price on tomatoes have being increasing. Because of this price increase Wendy’s fast food restaurants have decided to stop offering this produce on their burgers until further notice. Equilibrium price the common ground for a buyer and a seller. Same scenario happened with strawberries, because of the bad weather the farmer’s crops were damaged and they will force to increase the price on strawberries. It was noticeable at your groceries store the increase on prices. Consumers choose not to pay the high prices meaning that the supply of strawberries will increase and go bad. Sometimes business choose to low the prices before the produce will go bad even if this means that won’t make a lot profit.…

    • 421 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    To answer this, first we have to understand what determinants will shift demand and supply. There are five demand determinants, they are T-I-P-E-N. Taste of preference, income, price of complements and substitutes, expectation of consumer regarding future price and numbers of buyers in the market. And there are five supply determinants, they are P-R-E-S-T. Number of producers, resource price, business expectations, subsidies and taxes, and technology. In this case the increase in demand for corn is the result of increase in number of buyers in corn market due to it’s use as an alternative energy source, since there are more buyers in the market which means more income too, therefore farmers will use more or all their farm land to produce corn and less or no farm land to produce soybeans. And this will result in a decrease in soybean supply due to less farm land for soybean production. The factor for this supply shift is because the number of producers decreased.…

    • 589 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Economics 2 Quiz

    • 998 Words
    • 4 Pages

    12. The market for agricultural products has experienced advances in technology but has relatively inelastic demand. The combination of these two effects is an increase in supply, a large…

    • 998 Words
    • 4 Pages
    Good Essays
  • Good Essays

    how producers respond to price changes will affect how high prices rise and how low…

    • 962 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Week 2

    • 290 Words
    • 2 Pages

    As we has discussed, elastic demands are placed upon items that are commodities rather than needs. The change of eggs prices are forced due to the demand. During the summer months, egg supply is higher and lower during the winter months. Beef prices change when with customer preference such as competition, safety concern, income, etc. Demand shifts do not cause the price changes in the norm. Somethimes, the government will intervene to affect prices of these items as well. Supply and deman have no affect upon equilibrium price by definition. The equilibrium price is when neither of these items affects the sale. For example, during Easter, consumers will buy eggs to color at home for their kids and host Easter egg hunts. Regardless of the supply or price, the demand will increase. Beef has more of a buying response because it is very convenient for consumption; and can be used to make various dishes. There are some beliefs that beef has more vitamin content as well.…

    • 290 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    In Italy due to the shortage of supply of wheat (because of the global warming and increased demand for bio-fuel), a significant price rise has accured. In this case I think that the government can subsidies not the manufacturers themselves but the farmers, which will allow them to crop and harvest more…

    • 648 Words
    • 2 Pages
    Good Essays
  • Good Essays

    To begin with, strategies mentioned in “The Future of Food” need to be put to use, in order to overcome the challenges we face in meeting the growing demand for food. Elizabeth Dickinson states, “the world is always on the verge of a food crisis” (144). The population in this world is growing larger and larger everyday, so imagine how much food production would need to increase to feed 9 billion people by 2050. For example, in Elizabeth Dickinson’s info graphic essay, the largest number of respondents voted that the world would need to increase its food production by 70 percent. That is an enormous percentage because we would need to start increasing the production from now, so by the time 2050 comes around we will have increased by 70 percent. If we delay the process of starting to increase the food production then we will probably still won’t be able to feed the whole world in the future. As the population grows, increased demand will lead to higher food prices. For example, at any time demand for a commodity rises, prices generally surge. On the other hand, at any time demand for a commodity goes down, prices decrease. The cycle works the same with supply. An increase in supply on constant demand will cause a decrease in prices while decreasing demand will cause an increase in prices. In other words, if…

    • 1279 Words
    • 6 Pages
    Good Essays
  • Satisfactory Essays

    - Market equilibrium price is the state in which the market supply and demand is at balance eand as a result prices become stable. Equilibrium quantity is equals the quantity demanded and quantity supplied. In a market graph, the equilibrium quantity is located at the…

    • 449 Words
    • 2 Pages
    Satisfactory Essays
  • Best Essays

    Sustainability and Food

    • 1851 Words
    • 8 Pages

    The global food crisis is looming large and food situation in the world is becoming precarious. Providing food for millions in the poor countries of Asia and Africa has become a challenge. Apart from the droughts and floods caused by deforestation and global warming, converting the agricultural lands with water sources for industrial or real estate purposes and using agricultural lands for cultivation of plants like Jatropha for production of biodiesel and sugarcane for ethanol have considerably increased the cost of foodstuff worldwide. Krugman, P. (2011) states that while several factors have contributed to soaring food prices, what really stands out is the extent to which severe weather events have disrupted agricultural production. And these severe weather events are exactly the kind of thing we’d expect to see as rising concentrations of greenhouse gases change our climate — which means that the current food price surge may be just the beginning.…

    • 1851 Words
    • 8 Pages
    Best Essays
  • Good Essays

    economics problems

    • 674 Words
    • 3 Pages

    Because orange juice becomes more popular, demand increases and the demand curve for orange juice shifts rightward. The cheaper picking robot lowers the production costs of orange juice, so the supply of orange juice increases and the supply curve of orange juice shifts rightward. The equilibrium quantity increases. But the effect on the equilibrium price is ambiguous. If the change in supply is greater than the change in demand, the shift in the supply curve is greater than the shift in the demand curve and the equilibrium price falls. If the change in demand is greater than the change in supply, the shift in the demand curve is greater than the shift in the supply curve and the equilibrium price rises.…

    • 674 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Social Wicked Problem

    • 753 Words
    • 4 Pages

    Climate change and natural disasters are another factor contributing to the food system crisis. As the world increases its trading and relies more on this system, elements affecting one major provider are felt globally. A catastrophic drought in Russia caused global wheat prices to rise 70% higher in 2011 compared to the previous year; causing major issues for the world’s poorest people, who spend 80% of their income on food (Ford, 2011). Climate change caused by humans and natural disasters add more elements to the food system predicament, further…

    • 753 Words
    • 4 Pages
    Good Essays
  • Better Essays

    The increasing global food prices food prices possess a major threat. This increase in food prices sometimes cannot passed to the consumers since sales will decline. This negatively affects the profit margin.…

    • 910 Words
    • 4 Pages
    Better Essays
  • Powerful Essays

    Gregory, P. J., Ingram, J. S. and Brklacich, M. 2005. Climate change and food security.…

    • 878 Words
    • 4 Pages
    Powerful Essays
  • Powerful Essays

    Price: One of the main factors affecting demand would be the Price of the product or service. There is an inverse relationship between the price of…

    • 2769 Words
    • 12 Pages
    Powerful Essays