PEMicroeconomics Supply and demand chain presentation slides

CHANGE IN DEMANDPe and Qe decrease Decrease in the number of customers The demand curve shifts to the left Q1 Q2 E1 E2 D1... Input price Upstream value chain.. CHANGE IN SUPPLYDecrease

SUPPY

AND DEMAND

WE ARE AWESOME ECONOMISTS

TABLE OF CONTENTS

MARKET 3 COFFEE

MARKET 1 SUGAR

MARKET 2 FAST FOOD

01

Why is it important

to study demand and supply model?

It helps with pricing and buying

decisions a better-informed

consumer and a strategic producer

Better predict the future and plan forwhat might come

It’s difficult to comprehend how this

concept plays out in businesses aroundthe world

other crops due to low prices.

(Ionova, 2018)

A MARKET OVERVIEW

B CHANGE IN SUPPLY:

A ban on neonicotinoids

Decreased cultivated area

Dry weather in many producing regions

Q2 P1

P2

According to Gebhard, reducing production by at

least 20% is the best strategy for reviving prices.

(Ionova, 2018)

Future Market:

MARKET 2: FAST FOOD

easy, cheap, and fastoptions

The chart shows the Fast Food Market Size over a forecast period from 2016 to 2022

These estimates were made before the Coronavirus (COVID-19) pandemic.

(T4's service, 2021)

Before the pandemic, the fast-food industry

enjoyed the benefits of globalisation and had a

CARG rate of approximately 5% from 2014 to 2019.

However, due to the global pandemic, the sector has lost the benefits in many ways.

=> The equilibrium price and the

quantity demanded for fast food

P1 P2

Q1 Q2

E1

E2

Market 3

COFFEE COFFEE

MARKET 3: COFFEE

04

Covid-19 pandemic hascaused an unprecedentedeconomic recession globally The coffee sector is also

negatively impacted

A MARKET OVERVIEW

Q1 Q2

E1

E2

D1

Increase in number of consumers Demand side

(At supermarket and retail store)

Demand side

Decrease in the number of customers

1.The result of panic buying 2 The decline in out of home consumption

B CHANGE IN DEMAND

Pe and Qe decrease

Decrease in the number of

customers

The demand curve

shifts to the left

Q1 Q2

E1

E2

D1

C CHANGE IN SUPPLY

International shipping

Local currencydevaluations

Downstream value chain

Technical assistance access

Labour supply Input price

Upstream value chain

Internal logistics networks

Poor harvest prospects

Interest rates on fresh credits

C CHANGE IN SUPPLY

Difficulties in International shipping

Restricted lockdown High transportation cost Lower stocks for export

Coffee price lose against the US dollar

E.g: the Brazilian real lost around 15% against the US dollar

in the first quarter of 2020

P1 P2

C CHANGE IN SUPPLY

Decrease in Labour supply

Pe increase, Qe decrease

Poor harvest prospects

E.g: bad weather in Brazil

Inventories were running low

(ICO, 2020)

Upstream value chain

(ICO, 2020)

C CHANGE IN SUPPLY

Increase in Input price

Pe increase, Qe decrease

Decrease in Technical assistance access

Obstruction in Technical assistance

Reduce supply quantity

Upstream value chain

C CHANGE IN SUPPLY

Interest rates on fresh credits

Reducing farmers’ use of fertilizer

P1 P2

Q2

Upstream value chain

Increase in Input price

Poor harvest prospects

Decrease in Labour supply

Upstream value chain

C CHANGE IN SUPPLY

Decrease in Technical assistance access

Interest rates on fresh credits

Pe increase, Qe decrease

Demand curve shifts to the left Demand and

Supply curve shift to the left Supply curve

shifts to the left

International Coffee Organization (2020) Coffee Break Series No.1: IMPACT OF COVID-19 ON THE GLOBAL COFFEE

SECTOR: THE DEMAND SIDE Retrieved from:

<https://www.ico.org/documents/cy2019-20/coffee-break-series-1e.pdf>

International Coffee Organization (2020) Coffee Break Series No 2: Volatile coffee prices: Covid-19 and market

fundamentals Retrieved from:

<https://www.ico.org/news/coffee-break-series-2e.pdf>

International Coffee Organization (2020) Coffee Break Series No.3: IMPACT OF COVID-19 ON THE GLOBAL COFFEE SECTOR: SURVEY OF ICO EXPORTING MEMBERS Retrieved from:

<https://www.ico.org/documents/cy2019-20/coffee-break-series-3e.pdf>

Ionova, A (2018) EU sugar output could drop further as growers turn away from beet Retrieved from:

<https://www.reuters.com/article/eu-sugar-iso-idAFL8N1Y242U

Sugar Market Observatory (2019) Retrieved from:

report_en.pdf>

<https://ec.europa.eu/info/sites/default/files/food-farming-fisheries/farming/documents/sugar-mo-2019-04-26-T4's service (2021) Fast Food Market Share Retrieved from:

<https://www.t4.ai/industry/fast-food-market-share>