hellosxD,

this is my first time blogging. yup, do correct me if i make any stupid mistakes.


haha. so i shall continue. I accidentally stumbled upon http://www.economicsnews.com/ which is a very interesting and informative website that updates new economic articles every single day.

wow. with such a COOL WEBSITE, all of you have no more excuses to say that you have totally no idea about the various major events related to economics:) "evil laughs"



well,let me share this news with you:



"THE Haitian capital was paralysed by food riots yesterday as the UN gave warning that soaring food prices were spurring unrest around the world."



you might wonder where is this so called "haitian capital' and no, it is not in china:/


It is actually a Latin American country located in the Greater Antilles archipelago on the Caribbean island of Hispaniola( got this from wikipedia)

this sounds so geography. but never mind.

"Rioters returned to the streets in Port-au-Prince a day after UN peacekeepers had to fire rubber bullets to prevent hungry Haitians from storming the presidential palace. Columns of thick smoke rose over the city as demonstrators, demanding that the Government take action over the rising price of foodstuffs such as rice, beans and oil, set fire to barricades made from tyres. Protesters compared the burning hunger in their stomachs to bleach or battery acid. The unrest provided dramatic evidence of the destabilising effect of accelerating food inflation around the globe. Food prices are surging because of increased demand from emerging markets such as China and India, a drought in grain-producing Australia and competition with plant-based biofuels. "

as the saying goes, a hungry man is an angry man:)


this suggests that the rising prices of food can not only result in a decrease in quantity demanded of the good by the consumers and also a deadly social unrest!


but what are the reasons for the surging price of foodstuff?
the demand has increased basically due to :

1. emerging markets such as china and india
China and India are developing in a super fast pace. Therfore, they have to import and produce more food to feed their hungry citizens so that they can contribute to their country's growth more efficiently.

2. a drought in grain producing australia( issue on global warming )
With numerous failed crops, australia has barely enough grains produced for sale, resulting in a leftward shift of the supply curve. Expecting the prices of grain to rise rapidly,consumers increase their demand for grains so that they can store them(non-perishable).


3. competition with plant based bio fuel
This is a diagram that i painstakingly drew at 12a.m. As you can see, the demand curve will shift to the right ( not a movement down the demand curve) due to changes in non-price factors. The supply curve moves to the left(australia's failed crops). The shift in the supply cuve is much smaller as compared to the demand curve. As a result, the equilibrium price of the food will increase from P1 to P2 when the demand increases and supply decreases. Get the idea?


As food is a necessity, its price elasticity of demand is generally price inelastic, bringing about a less than proportionate change in the quantity demanded when the price changes.
"Haiti, the poorest nation in the Western hemisphere, is particularly vulnerable to food inflation because close to 80 per cent of its nine million people live on less than $2 (£1) a day. "
In addition, the small proportion of income spent on the good by the people further support the fact that PED is price inelastic.
Therefore, the demand curve will be a steep sloping one. When the prices of food increases rapidly, the quantity demanded will only decrease by a relatively small extent as people depended on food for survival. In the end, it all boils down to whether the people can afford it.
As the citizens of haitian capital cannot afford it, they have no choice but to carry out riots to "force" the government into controlling the high prices of foodstuff.


"The UN says that global food prices have risen 65 per cent since 2002, with grain rising 42 per cent and dairy products 80 per cent in 2007 alone. The UN Food and Agriculture Organisation (FAO) said in a recent report that Burkina Faso, Cameroon, Egypt, Indonesia, Ivory Coast, Mauritania, Mozambique and Senegal have all seen unrest in recent weeks linked to food and fuel prices. “There is a risk that this unrest will spread in countries where 50 to 60 per cent of income goes to food,” Jacques Diouf, the FAO director-general, said yesterday in Delhi."
observe how horrendously the global food prices has increased. I wonder how much more will the prices increase:/ and of course, it does relate to us as the prices of the canteen food may increase when the unit costs increases as the store owners still need to continue making profits.
haha. yup, do enjoy the current food prices while it lasts!
phew, what a long post. i am deadbeat.

thats all for today,


huiming

reference: http://article.wn.com/view/2008/04/18/Anger_grows_in_global_food_crisis/