NUTR SCI 350 Lecture Notes - Lecture 22: Revenue Assurance, Poorhouse, Demand Curve
17 May 2018
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04/25/18 lecture 22: Chapter 21 scenarios
Review:
What causes a shift in supply versus a move up the supply curve? Give examples.
-Analyze the world market for wheat, a critically important food source:
World Wheat Market:
Scenario 1:
Population increases by 10% over a five year period.
• Supply does not change
• Expect an increase in demand curve leading to higher prices
Scenario 2:
United States, E.U. and Australia reach agreement to remove production subsidies on wheat.
• Does not impact demand
• Shift back in the supply curve
Scenario 3:
Massive reduction in rice crop due to weather disruption.
• Demand for wheat shifts out to the right
• Supply side issue in one market causes a demand issue in the other market
• Price of wheat goes up
Scenario 4:
Massive FDI by China into African Ag leading to large supply increase of non-wheat cereal
production.
• With more of competing cereals available in world market, less people will be buying
wheat
Iraq Policy Bust (Box 21.1):
• Example of bureaucratic mistakes
o government sold all wheat production inputs at below market prices
o Leased land at below market rates.
o Bought all production.
• Led to:
o no innovation
o poor farm management
India Subsidy problems (Box 21.2):
• Subsidy based on calculated full cost of wheat/rice production.
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Document Summary
Analyze the world market for wheat, a critically important food source: Population increases by 10% over a five year period: supply does not change, expect an increase in demand curve leading to higher prices. United states, e. u. and australia reach agreement to remove production subsidies on wheat: does not impact demand, shift back in the supply curve. Massive reduction in rice crop due to weather disruption: demand for wheat shifts out to the right, supply side issue in one market causes a demand issue in the other market, price of wheat goes up. Massive fdi by china into african ag leading to large supply increase of non-wheat cereal production: with more of competing cereals available in world market, less people will be buying wheat. Iraq policy bust (box 21. 1): example of bureaucratic mistakes, government sold all wheat production inputs at below market prices, leased land at below market rates, bought all production. Led to: no innovation, poor farm management.
