Economics of Avocado Market in Australia

The assignment discusses the economics of avocado market in Australia, focusing on the impact of avocado shortage on the country's economy. It examines the market structure, supply and demand, and price stability, using data from 2015-16 to support its arguments.

Economics Assignment

Introduction
The market supply and market demand of avocado have
fluctuated in international market, which in turn, can influence
the domestic market of this specified product in Australia by
increasing its price. However, according to the Avocado
Australia CEO John Tyas, Australia’s market is going to remain
stable. In this context, the impact of excess demand of avocado
can be described in international market, for which, Australian
consumers are expecting a price hike while the state, by
supplying sufficient avocado, can ensure its customers about
the price stability. Moreover, the nature of avocado market can
be described with the help of some economic concepts, for
instance, the concept of market structure.

Impact of avocado shortage
• The world market is facing shortage in avocado
supply due to drought, flood and strike of
farmers
• The demand of this product is increasing in China
and the U.S
• In U.S, per capita consumption of avocado has
increased by around 1.5% over the last 9 years
• China’s demand for avocado has increased
significantly, since 2013 from Latin America

Avocado market in Australia
• The domestic price of avocado has increased
by AUD 0.40 during last year.
• The price of avocado can be increased by
around AUD 90 for the next year
• Due to increasing demand for avocado, the
price of this product is also increasing
• Per capita consumption of this product is 3.2
k.g during 2015-16 and the trend is increasing

Supply of avocado in
Australia
• Australia’s climate is perfect to produce
avocado by a large amount
• The country can produce two types of
avocado, that is, Shepard variety and Hass
variety over the entire year
• Australia has received huge amount of
avocado from New Zealand
• The country only exports 5% of its total output

Statistical data of avocado supply
P
Figure 1: Supply of avocado in Australia

Cost of Avocado in Australia
• the price of avocado is not going to increase due
world shortage of this product
• The country has supply sufficient amount of
avocado
• As the country only exports only 55 of its total
supply, the country may not face huge shortage
regarding its supply
• Thus the cost of avocado may remain same for
the consumers

• The supply of avocado has decreased in Mexico
due strike of farmers
• The demand for this product remain same, for
which domestic price of that product has
increased
• Increasing price of this specified product has led to
increase the price of avocado processed products
• Australia can buy those processed products with
higher price
Costs of processed product

Conclusion
After analyzing the shortage of avocado in world market,
it can be concluded that the price of this product can be
increased in international market. However, in Australia,
the price of this product may not be affected significantly,
as it does not export this fruit in other countries by a large
amount. Moreover, the country has sufficient amount
avocado supply and sufficient demand in domestic market
and this in turn can help the country maintain a
sustainable price in domestic market. However, due to
increasing demand in domestic market, the price can raise
by a small amount.

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