Intro To Ag Economics Flashcards
What are the Actors in the Agri-food system?
Producers -> Processors
Distribution-> Retailers. Consumers
Describe the actor graph
Funnel shape
Captures differences in the number of PRODUCERS/CONSUMERS
Implications for MARKET POWER in the food system
Describe the actor graph
Differences in market power
Different degrees of control of prices
Importance of setting FOOD SAFTEY/ANIMAL WELFARE STANDARDS
Imortance in shaping consumers tastes /preferences
HARD DISCOUNTERS in last 10 years market share 22%
What are the changing consumer trends?
Price changes Consumer incomes Demographics Lifestyles Tastes/preferences
NICHE SECTORS-ethnic, organic, fair trade,welfare friendly, local
CONVENIENCE FOODS -energy dense processed foods, high sugar and fat
What is the cost of food in Ireland?
Recent survey showing Ireland is still the HIGHEST in EU
18% more expensive than EU 27 average
75% more expensive than EU average for Alcohol
FOOD+AlCOHOL is 10% of household budget
What are the markets for Agricultural goods?
Operation of the economy differs by sector
Key distinction is the level of STATE INTERVENTION
Government intervenes to REGULATE PRICES
Different parts of the Agri food sector are open to MARKET FORCES to a different degree
Why is the Agri - food sector important ?
IRISH OWNERSHIP > 90%
HIGH SPEND -> Irish raw materials
Good GEOGRAPHICAL SPREAD
Important for RURAL DEVELOPMENT
LOW IMPORT
The Agri-Economy and the Rural Economy ?
40 % -> Rural areas
Strong REGIONAL DIFFERENCES ->living standards, employment
Agricultural/ Rural policy -> wider economy
MULTIFUNCTIONAL -> Rural areas, food/ fiber, landscape, biodiversity, environmental quality
Overview of the Agri-food sector
Importance of BEEF and DAIRY farming * 70% value of agricultural output 2016
FARM NUMBERS DECLING,170000 in 1991 -140000 in 2013
Rise of PART TIME FARMING -50% with off farm job
Food processing, distribution and retailing are CHANGING RAPIDLY, more INTEGRATION and internationalization
VERTICAL INTEGRATION- firms involved in more than one part of the Agri food sector
Growing importance of RETAILERS as gate keepers of the food system
Very INTERNATIONALIZED sector
What determines the supply of a good?
TECHNILOGICAL CHANGE has a major impact on supply function
TECHNILOGICAL CHANGE is the biggest driver of increased food production
Always a force which impacts POSITIVELY
Sources:
Equipment,it and telecoms
Research and development
Improved training/ EDUCATION
Impact of GOVERNMENT POLICY on supply
REGULATION function : public health, food saftey, animal welfare
Describe High and / or rising market prices
A INCENTIVE to a producer to supply more
Dampens down DEMAND by consumer
Prices CONVEY info about oversupply, scarcity, excess demand
Some sectors are vulnerable to PRICE VOLATILITY
CLASSICAL ECONOMISTS believe that price is the invisible hand of the market
Supply and DEMAND for a good will adjust if price is left to adjust
LOWER INCOME HOUSEHOLDS spend more of their income on BASIC NEEDS eg housing, food
What is Price elasticity of demand ?
We now know somthing about the nature of the relationship between demand for a product and its price
PED = % change in QD of good
% change in its price
Eg. supermarket beef prices fall 10% and consumers buy 20 % more, PED = -2
PED = 20% = -2
-10%
PED = change in demand for a good as a result of change in its own price
PED estimates used to catagorise different types of a good
PED estimates always - DEMAND CURVE SLOOES DOWNWARDS
PED used to categorize good as ELASTIC or INELASTIC
Price elasticity estimates
Using beef demand, PED of -2 means demand is ELASTIC
If beef prices fell by 10%
Where demand for goods is elastic consumers are relatively RESPONSIVE
PED estimates for a good are affected by
MORE SUBSTITUTES - high elasticity
NECESSITIES WITH FOOD SUBSTITUTES
