Macro and Microeconomic Analysis of Abundant Produce Limited

This article provides a macro and microeconomic analysis of Abundant Produce Limited, an Australian agricultural company. It discusses elasticity, consumer choice, demand and supply, aggregate supply and demand, production cost, and macroeconomic measurement.

Running Head: MACRO AND MICROECONOMIC ANALYSIS OF ABUNDANT PRODUCE LIMITED 1
MACRO AND MICROECONOMIC ANALYSIS OF ABUNDANT PRODUCE LIMITED
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MACRO AND MICROECONOMIC ANALYSIS OF ABUNDANT PRODUCE LIMITED 2
Introduction
Abundant Produce Limited is an Australian Company and is in the list of the ASX
Companies (Rosa, Izan & Lin, 2014). It is in the Agricultural Industry, consumer staples sector
and Agricultural Producers sub-industry. It generally offers agricultural commodities which
include cucumbers, tomatoes and food crops in general. The major food crops offered by
Abundant Produce Limited are seeds which generally have the capability of growing in areas
experiencing harsh climatic conditions. These conditions include from extreme temperatures
which most of times occur in areas which lacking modern greenhouses, water inadequacy and
poor quality of soils. Abundant Produce Limited generally operates in a highly competitive
environment and hence its management needs to be always alert of the prevailing macro and
microeconomic conditions in the market for immediate adjustment.
Discussion
Elasticity
In economics, elasticity generally reflects a variable’s responsiveness due to a change in
another dependant variable (Kirschen, Strbac, Cumperayot & de Paiva Mendes, 2014). In the
context of economics and business, elasticity acts as an indication of the extent of change in
demand and supply by the consumers and suppliers as a result of change in prevailing
commodities’ prices in the market and a change in the consumers’ level of income. The demand
and supply for Abundant Produce Limited is elastic. This is due to the competitive nature of the
business environment in which the company operates. Abundant Produce Limited faces stiff
competition from the major companies in the same industry. Some of these industries include the
Blackmores and Bellamy’s Australia Limited which are also listed in the ASX Companies

MACRO AND MICROECONOMIC ANALYSIS OF ABUNDANT PRODUCE LIMITED 3
(Hossain & Adams, 2014). These companies offer similar products to Abundant Produce Limited
and their products are highly demanded both locally and internationally. Abundant Produce
Limited also faces stiff competition from countries like India and China considering the world
tomato market sector. These two countries have won more than 40 percent international market
share being followed by Turkey with 6 percent international market share. Small other
companies like Abundant Produce Limited share only a small international market share
percentage. This therefore means that Abundant Produce Limited has to offer its products at
prices which consider the consumer level of income as well as the prevailing prices in the
market. Any attempt by the company to increase its prices will definitely lead to drastic losses as
its customers shift to other competitors’ cheap products. An attempt by the competitors to raise
their prices also becomes an advantage to Abundant Produce Limited as more competitors’
customers shift to buy its products and hence it will definitely increase its market supply.
Consumer Choice
Abundant Produce Limited majorly specializes in production of seeds which yield much
in harsh climatic conditions such as inadequate water supply, extreme temperatures and disease
proneness. The company should ten target areas with these harsh climatic conditions and more so
the desert areas. The company has been doing better in choosing its consumers but still much
needs to be done so as to win the market internationally. Abundant Produce Limited has most of
its consumers in the Asia and Middle East regions due to lack of modernity in farming in these
regions. The regions lack modern technology greenhouses and have been great consumers of
Abundant Produce Limited seeds which survive in these areas. The company also needs to

MACRO AND MICROECONOMIC ANALYSIS OF ABUNDANT PRODUCE LIMITED 4
consider establishing itself in most of African nations which are dry and in need of advice on
which crops to major on.
Demand and supply
Demand is reflected by the amount of commodities that customers purchase. Supply
shows the amount that is offered by suppliers for sell in the market (Guide, Teunter & Van
Wassenhove, 2013). The demand for Abundant Produce Limited in Australia has been great.
Many Australians have been purchasing the high quality high yield Abundant Produce Limited
seeds to produce much and compete globally. The company has been adequately supplying its
products to Australians at reasonable competitive prices and this has seen it win a greater market
share in Australia.
Aggregate supply and aggregate demand
Aggregate demand indicates the overall demand for a given commodity in the economy.
Aggregate supply indicates the overall amount of a commodity which is offered for sell by
suppliers in the economy (Farmer, 2015). The aggregate demand and supply for the products
offered by Abundant Produce Limited has been great for the past years. The products offered by
Abundant Produce Limited and the other similar companies such as Bellamy’s and Blackmores
have been of high demand both nationally and internationally. In the international market the
companies have been supplying commodities according to their market share. Currently the
aggregate demand and supply for Abundant Produce Limited has increased due to its
improvement in production which has enabled the company to produce high quality clean
products which are not genetically modified. The demand for the clean products has increased

MACRO AND MICROECONOMIC ANALYSIS OF ABUNDANT PRODUCE LIMITED 5
currently making the company to increase its supply to quench the high demand. Demand has
been in various regions especially the Middle East and the Asia region.
Production cost
The cost of production indicates the total expenses incurred by a company in carrying out
its production activities (Farmer, 2015). Abundant Produce Limited incurs costs in producing its
products much of which come from research activities in attempt to produce high quality cheaper
products. Considering the cost structure of the company, its variable costs are lower compared to
the fixed costs. This shows that the company is a medium one which is still expanding. Improved
production methods should be used to minimize costs and maximize profits.
Macroeconomic measurement
A company’s macro-economy is measured by considering the external factors which may
affect its performance. These include political stability, interest rates, inflation rates, competitors
and weather conditions among others (Gomme & Rupert, 2012). Abundant Produce Limited
macro-economy is good and anticipated to be better in future. This is due to the fact that the
Australian political system is stable, interest rates are low at 1.5 percent, inflation rate is low at a
1.3 percent and the climate is good. Also the tax system for Australia is good as it favors small
companies like the Abundant Produce Limited. The Australian dollar exchange value against the
US dollar is at 0.72. This means that the company is likely to realize much profit in its
international business.
Conclusion

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In a nutshell, Abundant Produce Limited is a medium expanding company. The
management should analyze the prevailing macro and microeconomic conditions discussed and
take advantage of the available opportunities to expand its operations.
References
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