Agricultural Economics: Short-Term Outlook of Grape Wine Prices

This report provides an analysis of the grape wine market, focusing on price fluctuations and the factors influencing them. Part A offers a short-term outlook, examining price trends and the reasons behind the decline in grape prices in Australia, including weak economic conditions in the USA and UK, unstable agricultural conditions, oversupply, and changing consumer tastes. Part B explores how supply and demand dynamics, influenced by international factors such as weather conditions, economic and political climates, and government policies, affect agricultural commodity prices. The report references various sources to support its findings and discusses how these factors interplay to impact the market, specifically highlighting how changes in weather conditions and government policies can shift supply and demand curves, thereby affecting prices. This assignment, available on Desklib, offers valuable insights into agricultural economics.

AGRICULTURAL
ECONOMICS

TABLE OF CONTENTS
PART A...........................................................................................................................................3
Write a short term outlook (approximately for 3 years past the data you find) for your selected
commodity...................................................................................................................................3
PART B............................................................................................................................................5
Explain how the supply and demand affected the the prices of products...................................5
REFERENCES................................................................................................................................7

PART A
Write a short term outlook (approximately for 3 years past the data you find) for your selected
commodity.
Table 1Price of grape wines in past years
Year
Share
price
2012 247
2013 256
2014 200
2015 194
2016 184
Figure 1Wine grape price in Australia
(Source: Riverina wine grapes marketing board, 2017)
Some of the reasons due to which grape price decline in the Australia are given below.
 Weak economic condition of USA and UK: Weak economic condition of the USA and
UK market heavily affect the wine grape price in the Australia. It must be noted that USA
and UK are the nations that are heavily affected by the economic crisis (Australian wine,
2017). Due to economic crisis business conditions become uncertain and business firms
start curtailing their workforce and due to this reason unemployment rate get increased in

the both nations. Due to elevation in the unemployment rate people spending power get
reduced and this affects the demand of the grapevine in the UK and USA. Due to less
demand and high supply price of the grape wine fall sharply in the both market and
profitability of the business firms decline sharply. It must be noted that USA cover 27%
market share of total exports of gape wine that happened from the Australia market.
Apart from this, 35% market share of grape wine is covered by the UK market. Both
markets declined and due to this reason and due to increase in supply price of grapevine
declined.
 Unstable agriculture condition: Unstable agriculture production is one of the other
reason due to which price of grapevine keeps of fluctuating consistently in the market. It
can be observed that due to change in climatic conditions production also get changed
and due to variation in supply of grapes price of same also fluctuate in the market.
 Oversupply of product: Oversupply of the product in the market is the one of the main
reason due to which price of grapevine decline in the market consistently. It must be
noted that there must be equality in the demand and supply of the product (Oog, D.,
2017). If demand is less and supply is high then in that case price of the commodity
decline and due to this reason reduction is observed in the price of grapevine.
 Change in taste: Change in the taste is the one of the basic reason due to which price of
grapevine declined in the Australia and traders earn less profit in their business. It must
be noted that there are different variety of the grapevines in the market and with passage
of time people preference also get changed. Due to this reason demand of grape wine also
get affected in the market and this is the reason due to which less demand and elevation
in supply price of grape wine reduced sharply in past few years. Thus, it can be said that
change in taste, oversupply of product, unstable agriculture conditions and weak
economic condition are the one of the main reason due to which grape wine price reduced
in past decade.

PART B
Explain how the supply and demand affected the the prices of products
International factor impact on the prices of agricultural commodity are as described
below-
 Weather conditions- It has been seen that most of commodities are internationally
traded that majorly include agriculture products. Therefore, the production of these goods
are highly depends on the weather conditions of a country. It can be said that there is a
sudden happen of changes in the climatic condition of a any country. It involves that
there is rainfall are inadequate or draughts are might impact on the agriculture products
availability all over the world market. Thus, there is an causes of scarcity and commodity
of agriculture prices are to be pushed northwards.
 Economic and political conditions- There is an on another international factor that may
highly impact on the agriculture products is only due to economic and political condition
of any country. It will impact where these agricultural commodities are produce as well
as consumed (Lenzen and et, al., 2012). Therefore, there is an example of Iraq in which
there is a Gulf war that are majorly producer of oil. Thus, the prices of oil are changes or
fluctuating frequently. Moreover, the condition of economic of country is might weak for
that major reason it will minimize the spending or purchasing of customers. Thus, it will
leads into the fallen into demand of buyers and there will be fluctuation of prices.
 Government policies- The another international factors is that changes in the
government policy it is due to impact of import or export cost to the purchaser or seller
which have a great impact on the prices of agriculture commodity. For instance, the
government of UK increasing the price of import of edible oil that will proportionally
impact on the price that is increase and vice versa.
The above factor may impact on the demand and supply if there is any changes in the price of
agriculture commodities are describe below-
Changes in the price of agriculture commodities due weather conditions( Increase)
There is shortage of commodity products due to scarcity of agriculture products raw
material. In that particular situation, it will directly of equally impact on the demand and supply
of the agriculture commodities (Johnson,2013). The producer of product are not willing to
supply the agricultural products in these events. It will increase in the price of mention product

so, the consumer will purchase at higher prices and it will also impact on the demand that will be
reduce from the previous particular time period.
It can be explained from the above figure is that the price of change in the agriculture is that it
will be increase that directly shift the supply. The price of increase will directly shift the demand
of the particular agriculture products that will be inelastic.

REFERENCES
Books and Journals
Johnson, H.G., 2013. International Trade and Economic Growth (Collected Works of Harry
Johnson): Studies in Pure Theory. Routledge.
Lenzen, M., and et, al., 2012. International trade drives biodiversity threats in developing
nations. Nature, 486(7401), pp.109-112.
Online
Oog, D., 2017. [Online]. Grape production in Australia. Available through :<
http://www.fao.org/docrep/003/x6897e/x6897e04.htm>. [Accessed on 2nd April 2017].
Australian wine, 2017. [PDF]. Available through :<
http://www.wfa.org.au/assets/noticeboard/Coles-Report.pdf>. [Accessed on 2nd April
2017].
Riverina wine grapes marketing board, 2017. [Online]. Available through :<
http://www.wgmb.net.au/index.php/products/utilisation-price-surveys>. [Accessed on 3rd
April 2016].