Pestle Analysis Economics

Economics IA

Organic grains in Austrailia

Summary

In the article on abc.net, Organic food expected to increase in price as demand outstrips supply. Anna Bushell has said that there is a large shortage in organic grain all across Australia. This means that organic foods in Australia could become more expensive, and it will be a lot harder to attain because there is a shortage in organic foods, but still a huge demand for it. There is no other option than to increase the price, which will lead to consumers paying higher prices.

Quentin Kennedy (Director of an organic company) has said that the very limited supply of the organic grain could influence the market vastly, and they could even go so far to see some organic products disappear from

Since the change in price of organic grains, did not affect the demand for it at all.

Market Equilibrium

When the demand of these organic grains increases, the demand curve shifts to the right. In addition, when the demand increases and the supply still remains constant, the price of organic grains will also increase because there is a limited quantity of the product. But consumers are still willing to pay a higher price due to the fact that there is a shortage for that product. Therefore, when organic companies are expected to increase the production of food because of a high demand and high price of the production, it will happen to fulfil the demand in the market.

Nevertheless, when the demand decreases, the demand curve will shift to the left, and so the price of the grains will fall too. This is because when there is a decrease in demand, the quantity also decreases because it could lead to a loss if there are too many products that are not being sold in the

This may happen due to Australian organic company’s considering to import goods from other countries, just to satisfy the “wants” of the consumers, making the supply and quantity increase. Making the price fall from P1 to P2

In graph B the quantity/supply of these organic grains decreases, which causes the curve to shift left from S1 to S2. Thus causing the quantity demanded drop from P1 to P2, but also making the price increase from P1 to P2 because when there is a limited supply of something, there is always going to be a higher demand for it.

The only way to fix this issue, from my point of view, is to increase the price of the grains, and increase importation of said goods. This way the demand will be lowered slightly, even though the PED is inelastic, and the production/importation of the grains. Meaning that supply will increase vastly, and demand will decrease slightly, in attempt to reach market equilibrium.

This means that the shortage of the organic grains will have a huge effect on the short term because consumers have to pay vast amounts of money to procure these organic foods. But in the long term, It will have almost no effect at all, because farmers will have time to convert to organic grains, and increase production a