Avocado supply and demand 2017

Economics reports: Shortage of Avocado

Table of Contents Executive summary 1 Introduction 2 1 Main issue 3 2 Stakeholders 3 2.1 Avocado Australia 3 2.2 Cafe 4 2.3 Consumers 4 2.4 Industry group 5 2.5 Grower 5 3 Economic concepts 5 3.1 The increase in demand for avocado 5 3.2 The decrease in supply for avocado 7 3.3 Shortage 7 3.4 Law of demand 8 3.5 Elasticity of supply 8 4 Recommendations 8 4.1 Investment in agriculture, education and tourism 8 4.2 Investment in manufacturing and technology 9 5 Conclusion 9 6 Reference 9

Executive summary
The purpose of this report is to outline the main issue and the stakeholders associated with the shortage of avocado in Australia. This report concluded the economic concepts related to the shortage of avocado and listed out the recommendation that could solve this issue — this report was written by using the knowledge and resource from new, reports and lecture notes. The research shows that the climate changes in Australia have affected the supply of avocado cause to the shortage of avocado. Also, will explain how the avocado production centre Michoacán in Mexico having a price dispute with the packaging company producer, affecting the supply of avocado to Australia. The main stakeholders are avocado Australia, cafe, customers, industry group and grower. The effect of the stakeholder discussed in detail in this report. Furthermore, five economic concepts are analysis, which are the increase in demand, the decrease in supply, shortage, the law of demand and elasticity in supply. Lastly, regarding the issue happening, the recommendation was made based on agriculture and technology.

Introduction
Avocado used to define as the dips and salads. However, they transformed as a superfood, according to their nutritional properties and smooth texture. More people found avocado’s benefit to their health. Lead to the demand of the avocado increase by year in Australia. For the past decade, each consumption has tripled from 1.2 kg to 3.5 kg, production has more than doubled from 30,000 tons to 60,000 tons, and the industry has increased almost fivefold from $100 million to $460 million (Tiger.W.,2017). Avocado has become the most favourite toast topping for those millennials in Australia. Due to the wave of how citizen love avocado, the Australia government said that’ Young teenagers spend too much their housing deposit on the smash avocado’ (Tiger W.,2017). However, avocado is seasonal fruit. Therefore, in the domestic area in Australia, the production of avocado is the covering whole year. This report will explain the main issue associated with the shortage of avocado and the effect on the related stakeholder. Besides, this report will discuss the economics concepts and give out the relevant recommendation to solve the issue.

1 Main issue
The main issue of the shortage of avocado is the decrease in supply from Australia. Due to the climate changes in the domestic area, the production of avocado in Australia is affected (Avocado Australia,2017). Avocado become more popular as breakfast for Australian. The demand for avocado is increasing rapidly, requires more and more supplies from producers. However, the supply can’t satisfy the increasing demand. Due to the avocado is a seasonal fruit (Avocado Australia,2017). At the Christmas event, are the bottom of the production. Due to the Christmas event in Australia, it is summer when the market is happening an increase in demand and decrease in supply. Due to the economics concepts of shortage, it will increase the price of the product. Therefore, customers have to buy the product will a higher rate. As a result, the price of avocado increased. One tray of 24 avocado, the price has increased from $40 to $150 (Jenny.N.,2018). When customers don’t will to pay more on the product, the demand will decrease and back to normal.

2 Stakeholders
2.1 Avocado Australia
Avocado is the most needed fruit in Australia. Australians have more than doubled their yearly intake of the fruit to kilograms in the past decade, Avocados Australia said (Esther.H,2016). Therefore, the supply of domestic farmer can’t produce the product that satisfies the current demand from the citizen. Thus, Australia received a large number of products from New Zealand, and many unexpected storms have occurred due to the inability to pick avocados in wet weather (Ally.F,2018). Due to the Kenyan government banned the expert of avocado, Australia loses a stabilization export supplier. Which make the shortage of avocado Australia facing become worse. (Ally.F,2018).

2.2 Cafe
Due to the shortage of the avocado, many cafes forced to set their price soaring on their chopped avocado powder (Ally.F.,2018). Especially cafe and restaurant in Queensland, for one pallet have to pay more than half of the original price. (Ally.F.,2018). On the other hands, facing the shortage of avocado. Some of the cafes have to reduce their amount of dish weight, by escaping the lack. (Ally.F.,2018).” We have reduced the scale of our services, so we sold a quarter instead of a full half of avocado,” Ms. Crawford said (Ally.F,2018).

2.3 Consumers
Avocado Australia said that “In the past decade, Australian have more than doubled yearly intake to 3.2 kilograms. (Esther.H,2016). According to a different store, the consumer has to pay a single avocado about $4 to $ 8 each. (Ally.F,2018). People used to think that avocado is a bit of luxury. However, it has been changed. Avocado has become a staple. People use butter to replace the avocado on toast and salads. (Esther.H,2016). When the customer came to the cashier noticed that the store no longer sale avocado, they feel lost and couldn’t speak. However, they won’t blame the store. They know what happens in Australia. Barista Benjamin Sneddon told the Gold Coast Gazette (Ally.F,2018). Besides, the consumer can afford the housing now without buying any avocado. (Ally.F,2018).

2.4 Industry group
According to September and October in 2015, there are more than 22,000 avocados traded (Olivier.L.2016). Also, according to November and December in 2015, there are more than 32,000 avocados purchased on Australia’s east coast. Until 2017, the sales of avocado have increased to 77,032. (avocado Australia,2017). The producer makes the price of a 5.5-kilogram tray stay about $45. Lead to reasonable retail prices and very healthy sales (Esther.H,2016). However, for the past few weeks industry blamed the rain and bushfire for Australia summer shortage. Lead to wholesale prices doubled, retail prices soared to $7 a fruit, and avocados were rationed (Esther.H,2016).

2.5 Grower
Due to some grower in Western Australia believes that demand for avocado will decrease therefore they grow a lot most of the summer supply (Esther.H,2016). Most of the grower is trying to make sure get avocado flowing into the market 52 weeks a year (Olivier.L.,2016). Mr. Alan said” grower decided to float more fruit before the Christmas. Due to this decision, it makes the avocado a little unusual, because the grower didn’t wait them ripen before they are picked (Esther.H,2016)

3 Economic concepts
3.1 The increase in demand for avocado
The increased in demand of avocado is a result of avocado is a seasonal fruit. When the Christmas time, the production of avocado reaches the bottom of its supply. Due to severe weather issues and incidents of forest fire, the demand of the avocado is rising at a higher pace, as compared with the supply (Raushenbush, 2012). As can be seen from the Graph1 below, the demand for avocados has been growing rapidly in recent years. As demand increases, the demand curve has moved to the right from D1. In addition, control the supply to maintain the appropriate price to keep the supply curve constant at S1. As a result, we can see that supply increases by the lowest level due to changes in demand

鱷梨的需求不斷增長

Graph 1 An increase in demand

3.2 The decrease in supply for avocado
/var/folders/r0/_d_3tgxj04727_2zsh5d3qcr0000gn/T/com.microsoft.Word/Content.MSO/21E40208.tmpDue to severe weather issues and incidents of forest fire (Raushenbush,2012). Lead to the supple of avocado decreased. Supply is expected to fall over the next few years. Currently, the price of avocados in the retail market has increased to $7 a piece due to increased demand and supply shortages. As you can see, avocados are sold at black market prices in some retail markets to maintain profitability. As can be seen from the Graph2 below, the supply of avocado has been decreasing this year. As supply decreases, the supply curve has moved to the left from S. In addition, with the demand curve stay in the same level. The decrease in supply will make the price of the product increased.

Graph2 A decreases in supply

3.3 Shortage
「law of demand」的圖片搜尋結果The current supply in the market is not enough to meet the growing demands of the consumers. The shortage has occurred due to increase in demand due to fall in the price of the Avocado in the past years. Currently, it can be seen that the demand for Avocado has increased at a tremendous rate that has emerged to be a problem for the Avocado producers (Riggs and Bonk, 2008). Hence, a high bulk of supply within a certain period led to shortage of supply in the current market scenario. As can be seen from the Graph3 below, the green line has higher requirements for avocados than lower product offerings. As a result, avocados are in short supply on the market. The shortage of avocados has caused prices to rise to match the Australian market equilibrium

Graph2 A decreases in supply

3.4 Law of demand
The current market requires more than the current supply. Therefore, the market will increase the price of the product, to ensure the demand from the consumer will decrease. By using this economic of concept, the demand of avocado could be solved when the price is increases to the level that consumers won’t willing to pay. When the demand is decreased to the level that supply can satisfy, shortage of the avocado will be solved. Graph 4 show the supply curve stay at the same amount. However, the demand increased from D1 to D2, the respond of price increased either.

超供需求導致供不應求Graph 4 law of demand

3.5 Elasticity of supply
Elasticity of supply is focused on the substitute goods are the easiest to transfer factors of production. The easier it is for these factors to shift from the production of one good to the production of another, the greater the elasticity of supply. Because durable goods can be stored for a long time, their supply elasticity is very high. But for non-durable and perishable goods, supply elasticity is often low. Graph 5 show that with a longer supply curve, its product a more flexible market. Industry group have more time to respond to the market changes.

Graph 5 Elasticity of supply

4 Recommendations
4.1 Price control
Due to the shortage issue, according to the basic of the demand. The price of the avocado increased is predictable. Therefore, price control is the most effective way to reduce the shortage. It also helps market to control the market couldn’t be black-marketed price. Reducing the crime of black-market. Setting up the market standard price also ensure the consumer won’t pay more than that to keep their personal right to enjoy what they want.

4.2 Stocking to control shortage
In order to manage deficit situation, stocking of product to a level of extent must be considered following government regulations (King, 2012). The marketers and Australian Avocado Association must look for such facilities to control such shortage situation. Preparing some stock before the summer season. Due to the summer is the bottom of the production of avocado, the shortage usually happens in this period of time. Keeping them by putting into the refrigerated warehouse. In the last decade year, refrigerate food are more popular to people. People will be willing to purchase the refrigerate avocado.

5 Conclusion
In conclusion, reduced supply and increased demand for avocados have led to a shortage in Australia. This report Outlines issues and stakeholders related to the avocado shortage. It also discusses five economic concepts related to the mining boom and provides the above questions.

6 Reference
· Cyntia, D.,2018,” There Is a Coming Avocado Shortage at Restaurant”, viewed 21st dec,2018,

· Foster, A.,2018, “Avocado price hike amid a nationwide shortage of the popular fruit”, viewed 21st dec,2018,

· Frank, A., n.d.,” Case Study On Avocado Shortage In Australian Market”, viewed 21st dec,2018,

· Han, E., 2016, “Avocado growers reject market manipulation claims amid national shortage”, viewed 21st dec,2018,

· Han, E., 2016, “The truth behind the avocado shortage: growers made 'innocent mistake', viewed 21st dec,2018,

· Jen.C.,2018, “Here's Why Avocados Have Gotten So Expensive Lately”, viewed 21st dec,2018,

· Lambert, O.,2016, “Farmers blamed for avocado shortage”, viewed 21st dec,2018,

· Michael, C.,2016, “When avocado demand outstrips supply”, viewed 21st dec,2018,

· Tejvan, P.,2017, “Diagram for Supply and Demand”, viewed 21st dec,2018,

· Tiger, W.,2017,” How the avocado smashed its way into Australia's heart”, viewed 21st dec,2018,