Price Inflation of the Acai Fruit

Price Inflation of the Acai Fruit Table of Contents (Jump to) 1. Introduction 2. Overview of Acai Market 3. Relevant Economic Model 4. Critical Analysis 5. Conclusion Reference 1. Introduction The Acai is a species of palm tree, its fruit generally known as â€Å"Acai Berry†. It grows mainly in the river side of Amazon of Brazil. The fruit is rich in calories, calcium, vitamin A, C, amino acid, antioxidant and some more important nutrient contents. This exercise will show the economic reason behind the steep price hike and what measures can be taken to combat against this price hike. I will also try to explain the rationale behind the proposed measures. Section two of this exercise will describe the market scenario of Acai fruit in Brazil, section three will contain relevant economic model, section four will depict critical analysis of key arguments and finally a conclusion will be drawn. 2. Overview of Acai Market The Acai fruit mainly grows in the Brazilian area of Amazon River basin. Traditionally the fruit used to cover major portion of diet of indigenous Amazon people. It was traditionally a food item for poor people. Due to its higher nutrient value the fruit has caught significant attention of International consumers. As a result the fruit has become a super food in US and international market in recent days. From a â€Å"giffen† good â€Å"Acai Berry† has now become a â€Å"super food†. The boom of Acai fruit consumption in last three decade created opportunities for new product pathways and transformation industries. Sharp rise of this product price is explained by the theory of demand. Due to Acai berry’s nutrient values, higher demand by Brazilian consumers and international demand Acai price has gone up significantly in past few years. Even after significant price increase demand for Acai berry did not decrease. This is may be the reason of its nutrient value. As the willingness to pay did not decrease; price of this product is continually increasing. Figure-1: Increase in Price due to increase in demand Table-1: Per capita GDP (PPP) of Brazil and the USA Country Value Brazil $ 12,100 USA $ 52,800 Source: The World Fact Book, CIA Acai Roots, a Brazilian company based in California, estimates the size of the US retail market for acai products to range between USD70 million to USD100 million. (Goddard, P. 2010) Acai trees usually produce fruit in three to five years of plantation. Trees produce fruit twice in a year. As Acai can be only produced in a specific climate (climate like river basin of Brazilian Amazon). It has a limited supply against the rising demand. Acai is now also growing in North Queensland of Australia, tropical forest of Malaysia, South Florida, Puerto Rico, and Hawaii. A survey by JD Power and Associates late last year (2013) found that American consumers are Optimism, they simply seek value for their money, Brand conscious, Authenticity-seekers, Purpose-driven, and Mature. Currently Brazil is experiencing a consumer behavior that America experienced post-WWII period of the 1950s and 1960s. Brazilian sales are growing four times faster than the U.S. Retail sales in the emerging market nation are increasing at 7 to 8% a year. At the same time America is only experiencing retail sales growth of about 2%. [Result is summarized from a research report of Boston Consulting Group (BCG)] 3. Relevant Economic Model Increased demand for Acai berry has created economic opportunity for many economic agents. As a result of increased demand Acai cultivation has now become commercial and many big commercial producers has now entered in to the market to raise the supply of Acai berry. Superior technology and cultivation process has been employed to increase the supply of Acai berry. No doubt that supply of Acai has increased in recent past but demand for this product has increased many folds than the supply. As a result supply force failed to bring down the price of Acai. Figure-2: Increase in Price due to greater increase in demand than increase in supply Due to Acai fruit’s global increased demand local producers of Brazil are now under presser of increasing the supply of this fruit. As this fruit requires a specific environment to grow, local producers are not being able to match with the demand of this product. As a result as theory of supply suggests price of Acai fruit has gone up significantly (prototype scenario is portrayed in figure-2). Because of its higher demand producers now can change high price for the product hence higher profit margins for the local producers and others. Theory of completion suggests super normal profit attracts more new entrants into the market. Super normal profit attracted many new producers and some corporations in to Acai production and processing industry. However, as described in figure-2, demand has increase more than the increase in supply. As a result price of Acai is still in climbing stage. But superior technology, better scientific production process can lead to a greater supply of Acai fruit which may create downward pressure on price. As multinational companies are now a player in Acai fruit industry they can exclude the small local producers from the industry. MNCs can do so because they have better supply-chain management, they can enjoy economies of scale hence lower cost of production. 4. Critical Analysis Exclusion of local small producers will have a negative effect on Brazilian economy. Some of the producer may need to switch from Acai production to some other crops. As a result their household income may fall. If their household income falls then the overall level of welfare of the local people will also decrease due to fall in income. On the other hand, engagement of large corporations and MNCs into the Acai production and processing industry may lead to economic development of the local community as well as Brazil overall. This is a paradox. One negative effect has stroked already that is exclusion of local poor indigenous people from the consumption of Acai fruit. Acai fruit used to be a major part of the local indigenous people is past, but increased price of Acai fruit has cut down those local indigenous people as its consumers. To me, this is a great paradox whether exclusion of small local producers of Acai will have negative effect on Brazilian economy or not. If the economic benefit of inclusion of large and multinational corporations in to Acai production suppresses the negative effect only then the welfare state of local small producers will not hamper. The government of Brazil may take some remedial measure to combat against the increase price of Acai and work toward supply enhancement. Some of the suggestions are: To fight against price hike Tariff on Acai fruit export Quota System These trade barrier will lead to less export of Acai from Brazil and local customer can enjoy Acai fruit will lesser price. Usually trade barriers used to protect local producers and local customers. But use of trade barriers to protect local consumers and producers is a negative tool in todays’ free world economy. For increasing supply Brazilian government can come up with few projects which will work for inventing better technology and production process so that the local producers can use superior production and processing system at lower price. These types of projects can lead to increase in Acai fruit supply, which will definitely create downward pressure on Acai fruit rising price. 5. Conclusion Acai fruit is a rainforest fruit that grows in river basin of Brazilian amazon. By the last decade the fruits’ demand has gone significantly producers have failed to generate adequate supply. Price of raw materials has gone up by many folds, suitable lands for growing Acai fruit is now becoming scares, increasing world demand for its nutrient value have led to enormous price hike. As the industry is not perfectly competitive, a super normal profit is exist in the industry. And economies of scale, higher raw materials price have excluded some small local producers from Acai production. Subsequently local indigenous people have lost their major diet which is beyond their reach. Increasing world demand, shortage of supply, and abnormal price hike in last few years, all these are now debatable issues, and prime policy concern. References Brasileiro, A. 2009, ‘Superfood’ Promoted on Oprah’s Site Robs Amazon Poor of Staple†. Retrieved from http://www.bloomberg.com Goddard, P. 2010, Brazil fruit juice production fuels drinks export. International News Services Hepburn, C. 2006, Regulation by prices, quantities of both: a review of instrument choice. Oxford Review of Economic Policy Krugman P. Obstfeld M., 2008, International Economics: Theory and Policy, 8th edition, Pearson International Edition Menezes, E., Deliza, R., Chan, H. L., Guinard, J.-X. (2011). Preferences and attitudes towards aà §aà ­-based products among North American consumers. Food Research International Muniz-Miret, N., Vamos, R., Hiraoka, M., Montagnini, F., Mendelsohn, R. (1996). The economic value of managing the aà §aà ­ palm (Euterpe oleracea Mart.) in the floodplains of the Amazon estuary, Parà ¡, Brazil. Forest Ecology and Management Samuelson A P Nordhaus D Wiiliam, 2010, Economics, 19th edition, McGraw-Hill Word Count: 1295 excluding table, graph and reference

An American Childhood Essay

In Annie Dillard’s â€Å"An American Childhood† she takes us the reader back in time. She tells of the activities and games she played as a child, which also draws the reader in to her story more bringing back the same memories from their childhood. She sets the stage around Christmas time on a weekday in late December. Her and her friends were standing in knee deep snow along the road waiting for cars to pass by, an easy target for anyone who could throw a snowball. It was clearly a great day for hitting cars with all the traffic they encountered on Reynolds Street. After some time had passed Annie and her friends decided an ice ball was the way to go. So without further due they spread out and waited for the next victim. Sure enough a black Buick came close and they opened fire. As soon as one snowball struck the windshield something that had never happened before began. The man pulled over and the chase was on. After winding all over town on the chase the man finally caught them. Out of breath the man in a stern voice shouted â€Å"You stupid kids†. For Annie and her friends the thrill of the chase was a glory they wanted to last forever. It was surely a winter none of them will forget. Dillard’s main goal in this story was to show how great her childhood really was. It depicts how most people would describe a traditional American childhood. The great thing about this piece was the descriptiveness of it. Details describing the other characters along with the setting, and elements such as the weather really paint a great picture of the scene of the events on Reynolds Street. Also the verbs Dillard uses to describe the chase and the event in the mans pursuit shows us how terrifying it would have been as a child running from a grown man. Overall it was a great story that could easily relate to any young American child which made reading this piece very simple.

Family Values Paper - 943 Words

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Overcoming Math Anxiety in the Elementary Grades - Free Essay Example

Sample details Pages: 3 Words: 802 Downloads: 3 Date added: 2019/04/01 Category Psychology Essay Level High school Tags: Anxiety Essay Did you like this example? Math anxiety has become very common today in students and has been shown to develop in students as young as age five. Math anxiety is more than just not liking math. People who suffer from math anxiety become stressed just at the thought of numbers. Don’t waste time! Our writers will create an original "Overcoming Math Anxiety in the Elementary Grades" essay for you Create order Students suffering from math anxiety become behind in school as a result of their fears. Math anxiety has to boundaries when it comes to age, race, or gender and affects all types of students. There are many reasons these students experience math anxiety, but with help from their teachers there are ways to alleviate some of these fears so that they may excel at math. Math anxiety refers to the anxious feeling that one cannot perform in situations that require the use of mathematics. This does not only affect students in school, but in all aspects of life that require math skills. Math anxiety is associated with intense nervousness or discouragement when it comes to math problems or tests. When students feel this anxiety they automatically shut down, which forces them to doubt themselves in their math abilities. When a student continuously fails at math, this causes them to have the mindset that they will always fail in the subject (Andy). One of the most common results of math anxiety is poor math skills and poor math grades. This does not only affect them in grade school, but follows them in their education through and after college (Shields). There are many reason that students experience math anxiety. One of the most common reasons for math anxiety is teacher attitudes. The way the teacher feels about the subject reflects onto their students. Teachers, just like students, either love math or hate it. When a teacher loves the subject they may put students down for not being as good as them at the subject. This can discourage a student and make them feel embarrassed. Also, if the teacher feels negative about math, they may put these feelings onto their students. It is important for the teacher to stay positive about math so that the students are comfortable when learning new skills. As a teacher, you should never put down a students for having the wrong answer, but value the students mistakes and figure out where they went wrong. Another reason students may experience math anxiety is their fear of timed tests. Although tests are essential in school, they should not be the main focus. The most important thing is that studen ts are able to take the skills they learn and use them in real life (7 Reasons). Not all students are going to think the same way. This results in different strategies and ways to solve the problem. Teachers should let students use their brains in their own way, as long as they are getting the correct answer. Many students think that math is boring. As an educator, it is your job to make students love math. If students are having fun learning, then they will forget their fears. To make math fun, you can turn problems into real life situations. Use names of students, solve problems that will make the students laugh, and solve problems as they are telling a story are all ways to make students enjoy the subject. When you teach students in ways that distract them from their anxiety, they become more engaged and excited to learn. Which results in better scores. (The Fear of Math) When I become a teacher, I realize that there will be many students in my classroom that will not be comfortable with math. I also feel that I have anxiety when it comes to certain types of math. I can only hope that my feelings toward this subject will not reflect in my classroom and onto my students. I am a firm believer in everyone thinks differently. All students are different and all have ways that work for them when it comes to academics. Letting my students think freely is very important to me and I want all of my students to know that. I also plan to focus less on testing and how fast a student can solve a problem, and more on making sure they get the right answer and are understanding the problem. As a teacher, my main goal is to make learning for my students fun and being sure that they can take those skills and excel in their education and in real life. Works Cited 7 Reasons Behind Math Anxiety and How to Prevent It. HomeSchoolMath.net, https://www.homeschoolmath.net/teaching/motivate.php. Joseph, Andy. Definition of Math Anxiety. Sciencing, 24 Apr. 2017, sciencing.com/definition-math-anxiety-5666297.html. Shafer, Leah. The Fear of Math, Five strategies to help students conquer their math anxiety. Scholastic Instructor. 2015. Shields, Darla J. Teachers Have the Power to Alleviate Math Anxiety. Academic Exchange. 2005.