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Wong: hello, pls read the articles and begin filling in the different segments
You can discuss who does which part

alyssa: who is doing which part?
An: Wait lets see who's here first?
Luke: We have like 7 boxes to fill up, so maybe we could do 2 each?
Luke: Ok I'm wrong there's 8 boxes so 2 each
Luke: Please state which 2 you want to do
An: I thought there are 7 boxes
Luke: There's 8 if you count properly.
Luke: Where's Tianni btw
Luke: Ok i mistook the question itself for a box
An: Nvm we just fill in together whatever we can do first, like those definitions
alyssa: done
Mr Wong:

Tianni: sorry guys i
alyssa:
Luke: Do we want to discuss the points first?
Luke: Cheaper and better substitute (taste and preferences, availability of substitutes)

Luke: An but aren't we supposed to explain 3 factors on how the price of coffee beans fall? How does increase in cop lead to that

Tianni: how to open the attchaments?
help pls
i hv been clicking them for the past ten minus
i cant open thems ；

Luke: I sent the articles on whatsapp
Tianni: thanks luke

Mr Wong:  a key part of this exercise is to explain the dd and ss determinants (non-price factors) - pls fill it in to the correct box

First, the traditional markets for their wares are saturated. Growth in Europe, America and Japan, which between them glug over half the world's coffee, is flat. Second, in places like China, Indonesia and Brazil itself, where coffee is an affordable luxury for the middle class, the market is growing by around 5% a year. But these drinkers are filling their pots with cheaper robusta beans-what Kona Haque of Macquarie dubs the "emerging-market coffee". => tastes and preferences => demand curve shifts left

2011 Brazilian farmers invested heavily in new acreage and improved yields with better husbandry and more fertilizer. High prices also convinced Colombian farmers to replant many coffee plantations with more productive bushes. => higher state of technology => supply curve shifts right  ,

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Please write out the names of the members in the group.
(16S07)
1. Alyssa
2. Luke
3. An
4. Tianni

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Dear Students,

Welcome to Home-Based Learning 2016!

By now, you should have the list of the team members in your group. Each team will analyse 2 articles below to identify 3 evidence/information (2 Demand + 1 Supply or 2 Supply + 1 Demand factors)  to answer the following essay question:

a) With reference to the 2 news articles, explain the fall in prices of coffee beans in Brazil.

To discuss the answers with your group members, double click anywhere on the wall and a virtual "sticky note" will appear at the top. From, enter your name, then you can use the "sticky note" to "chat" with each other.

For example, Miss Lee: I don't think that is a non-price factor that affects demand. Please remember to write your name before the statement :)

Lastly, please identify these non-price determinants of demand & supply by quoting the relevant phrases from the article   . !!!!!!

For example, as stated in article 1, "the recession in Europe has hit demand". After quoting the evidence for the article please proceed to explain how this non-price factor affects demand or supply with economic rigour.

I have provided some scaffolding statements to guide you in your essay development. Address each statement by writing the essay segment in the respective sticky note. Press the pencil button to write the respective essay segment.

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With reference to the 2 news articles,  explain the fall in prices of coffee beans in Brazil.

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With reference to the 2 news articles,  explain the fall in prices of coffee beans in Brazil.

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NOT everyone appreciates the pungent smell of roasting coffee. Just ask the authorities in Brazil, who have been faced with farmers burning bags of beans and chanting slogans borrowed from recent nationwide protests to demand fatter state subsidies. The farmers are upset by falling prices: their beans now fetch around $106 a 60kg bag, a four-year low and less than half what they could get a couple of years ago. A reversal looks unlikely soon.

A third of the world's coffee is grown in Brazil. Along with other countries that mainly cultivate the tastier and pricier arabica-bean variety, it faces two problems. First, the traditional markets for their wares are saturated. Growth in Europe, America and Japan, which between them glug over half the world's coffee, is flat. Second, in places like China, Indonesia and Brazil itself, where coffee is an affordable luxury for the middle class, the market is growing by around 5% a year. But these drinkers are filling their pots with cheaper robusta beans-what Kona Haque of Macquarie dubs the "emerging-market coffee".
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Strong demand for entry-level coffee-40% of the world's coffee crop is now robusta beans-has enabled Vietnam to go from almost nothing a decade ago to producing 25m bags today (see chart). Worse still for arabica producers, the recession in Europe has hit demand and squeezed profits for roasters. These processors, including big food firms such as Nestlé and Kraft, have responded by blending cheaper robusta with arabica. As a result robusta prices have not fallen as fast as arabica. Even so, the narrowing gap between them has not yet prompted beancounters to reintroduce the costlier variety.

Nor is the supply of arabica beans likely to fall. In response to the high prices of 2011 Brazilian farmers invested heavily in new acreage and improved yields with better husbandry and more fertiliser. High prices also convinced Colombian farmers to replant many coffee plantations with more productive bushes. What's more, the bumper harvest of 2012, an "on" year for Brazilian coffee bushes, should be followed by an "off" year as the bushes' yields naturally fall after their exertions. Yet good weather means that even this year's "off" crop is a bumper one, with the prospect of another "on" year to come.

Low arabica prices are accompanied by rising costs. Coffee is a labour-intensive crop; picking is still largely done by hand. Wages in Brazil and Colombia are rising fast and production costs are above prices. Planting other sorts of crops, the usual response to agricultural boom and bust, is not an option. Prices for sugar cane, a potential alternative, are low. Coffee is mainly grown on small plots by farmers who have known nothing else.

Consumers ought to benefit from low prices, but discerning drinkers will still be disappointed. Demand for the fanciest arabica beans is healthy, as the global proliferation of coffee chains shows. Much of the finest coffee is grown in Central America in places such as Guatemala, Nicaragua and El Salvador. That region has been hit by leaf rust, a fungal disease, which could destroy 30% of the crop this year. Cutting back plants to deal with it is set to hit production next year, too. For the tastiest coffee, there is no chance of a cheap shot.

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NOT everyone appreciates the pungent smell of roasting coffee. Just ask the authorities in Brazil, who have been faced with farmers burning bags of beans and chanting slogans borrowed from recent nationwide protests to demand fatter state subsidies.

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Topic: Demand, Supply & Market Equilibrium

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Topic: Demand, Supply & Market Equilibrium

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Objective - Students will be able to identify and explain how the demand and supply factors affect the market for coffee beans.

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COFFEE has many devoted drinkers. Its appealling aroma and caffeinated kick mean that 83% of all American adults drink it, 63% of them on a daily basis, according to a survey from the National Coffee Association. Yet despite the strong demand for coffee, some suppliers are unhappy. In Brazil, which produces a third of the world's coffee beans, farmers are striking over falling prices and burning sacks of coffee in protest. Why are coffee-growers feeling the strain?

There are two main varieties of coffee bean: arabica and robusta. The former, which accounts for around 60% of the world's crop, is considered superior and fetches higher prices; the latter is a hardier crop, resistant to leaf rust, but has a more bitter taste. Most of the beans produced in Brazil are of the arabica variety. But these beans now fetch around $106 a 60kg bag, less than half of what farmers could get for them a couple of years ago. Farmers in Colombia and Ethiopia, who also produce arabica beans, are suffering too. The reason is that production of coffee, and of cheaper robusta beans in particular, is booming. Vietnam has gone from growing almost nothing a decade ago to producing 25m bags of robusta beans a year today. The result is an oversupply of coffee.
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This hurts producers of arabica in particular, for several reasons. First, consumption in the developed world-American, European and Japanese drinkers consume more than half the world's coffee-is flat, and the recession has squeezed the profits of big food companies such as Nestlé and Kraft. They have taken to blending cheaper robusta beans into their products to maintain their margins, causing the price of robusta to fall more slowly than that of arabica. In the developing countries such as China, Indonesia and Brazil, meanwhile, where the emerging middle classes are discovering the joys of coffee and the market is growing by around 5% a year, robusta is the bean of choice. To make matters worse for arabica growers, falling prices have been accompanied by rising costs: coffee is still largely picked by hand, and wages are rising fast in Brazil and Colombia. Many Brazilian and Colombian farmers invested to boost production of arabica in response to the high prices of 2011, which has added to the oversupply and further depressed prices. And good weather in Brazil means that this year's crop has turned out to be unexpectedly large. That is why Brazil's farmers are striking, and are demanding more protection, in the form of fatter subsidies, from the state.

Farmers who grow arabica beans tend to be specialists, and do not plant other sorts of crops (which is the usual way for farmers to insulate themselves from volatile prices for a particular crop). Prices for sugar cane, a potential alternative, are also low. Aficionados' demand for the fanciest coffees, which fetch higher prices, is healthy, but for farmers to move upmarket takes time and expertise. Indeed, discerning coffee drinkers are also feeling the pinch, because the Central American countries where the finest coffee is grown, including Guatemala, Nicaragua and El Salvador, have been hit by leaf rust, which could wipe out 30% of this year's crop. So even while arabica beans fetch low prices on commodity markets, the price of the fanciest beans is going up. A storm in a teacup it ain't.

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COFFEE has many devoted drinkers. Its appealling aroma and caffeinated kick mean that 83% of all American adults drink it, 63% of them on a daily basis, according to a survey from the National Coffee Association. Yet despite the strong demand for coffee, some suppliers are unhappy.

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Explain market mechanism:
Market mechanism is the principle of money exchanged by producers and consumers. If each individual in the society acts in such a way as to maximise his/her own interest, the free market will assure maximum possible benefits to society as a whole. (Invisible Hand principle) Which hence best distributes goods and services in a free market.

Define demand:
demand is the amount of a good that consumers are able and willing to purchase in a given period of time at various places

Define supply:
supply is the amount of a good that producers are able and willing to offer for sale in a given period of time at various prices.

Alyssa

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Body: Decide the direction and magnitude in which the curves shift

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Body: Decide the direction and magnitude in which the curves shift

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Demand curve shifts left due to fall in demand from non-price factors.
Supply curve shifts to the right due to the rise in supply from non-price factors.
Fall in Demand is greater than the rise in supply, as there are more fall in demand factors as compared to rise in supply factors.

Luke

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The original demand and supply curves are at D1 and S1, where equilibrium is at E1, and equilibrium price and quantity is at P1 and Q1 respectively.

An

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Body: Identify and explain whether the factor/event shifts the demand or supply curve. (2 Demand + 1 Supply or 2 Supply + 1 Demand)

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Body: Identify and explain whether the factor/event shifts the demand or supply curve. (2 Demand + 1 Supply or 2 Supply + 1 Demand)

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DEMAND 1. “The production of cheaper Robusta beans in particular, is booming.” "The massive production of robusta beans in vietnam results in an oversupply of coffee  " show that the change in demand of Arabica coffee beans, most of which are produced in Brazil, is due to non-price factor: high availability of substitutes. As the price of Arabica beans is higher than that of Robusta beans, quantity demanded for Arabica beans decreases. Consumers(coffee production companies+coffee drinkers) will switch from buying Arabica beans to Robusta beans as they ought to benefit from lower prices, and this causes the demand for Arabica beans to decrease and its curve shifts to the left. (Brazilian framers have to cut down price of Arabic beans to compete with the low-price beans for profits.)

DEMAND 2. “Coffee is an affordable luxury for the middle class in some developing countries; the market is growing by around 5% a year. But these drinkers are filling their pot with cheaper Robusta beans.” shows that coffee consumers in certain developing countries have great keenness on buying Robusta coffee beans rather than Arabica coffee beans, this cause the demand for the fancy beans produced in Brazil decreases and its demand curve shifts to the left.

SUPPLY 3. "Many Brazilian and Colombian farmers invested to boost production of arabica in response to the high prices of 2011." shows that oversupply of arabica beans causes further depressed prices.  It leads to the rightward shift of supply curve.

SUPPLY 4: 2011 Brazilian farmers invested heavily in new acreage and improved yields with better husbandry and more fertilizer. High prices also convinced Colombian farmers to replant many coffee plantations with more productive bushes. => higher state of technology => supply curve shifts to the right

Demand: First, the traditional markets for their wares are saturated. Growth in Europe, America and Japan, which between them glug over half the world's coffee, is flat. Second, in places like China, Indonesia and Brazil itself, where coffee is an affordable luxury for the middle class, the market is growing by around 5% a year. But these drinkers are filling their pots with cheaper robusta beans-what Kona Haque of Macquarie dubs the "emerging-market coffee". => tastes and preferences => demand curve shifts left  "

There are availability of  close substitutes for Brazil Arabica coffee in the market- robusta coffee. Consumers could purchase other robusta coffee from other producers such as Vietnam due to its oversupply leading to the fall in price 9” production of coffee, and of cheaper robusta beans in particular, is booming.("Vietnam has gone from growing almost nothing a decade ago to producing 25m bags of robusta beans a year today.”). Therefore, due to the price of its substitutes, coffee producers in Brazil cannot sell it in a higher price as to remain competitive in the  industry. This leads to the decrease of price mentioned in the article where 'The farmers are upset by falling prices: their beans now fetch around $106 a 60kg bag, a four-year low and less than half what they could get a couple of years ago'

Tianni + An

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Body: Using the market adjustment process, explain how the shift(s) changes the equilibrium price and quantity (Explanation of diagram):

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Body: Using the market adjustment process, explain how the shift(s) changes the equilibrium price and quantity (Explanation of diagram):

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Fall in demand is more significant that rise in supply. A downward pressure on price caused by the surplus, causes the price and quantity to fall, from P1 to P2 and Q1 to Q2 respectively.

Luke

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Final equilibrium is at E2, which is lower than E1.

Luke

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The concurrent rise in supply and fall in demand would reinforce each other to cause a sharper fall in equilibrium price. However, the effect on equilibrium quantity is indeterminate as it depends on the relative extent of changes in demand and supply.
If the fall in demand is greater than the increase in supply, equilibrium quantity will fall. On the other hand, if the fall in demand is smaller than the increase in supply, equilibrium quantity will rise.
An