Do you like chocolate? How much are you willing to pay? What might make the price of chocolate go up? A sudden surge in people's desire to eat chocolate? Valentines and a rush to buy all things chocolate? How about a bad storm that destroys cocoa plants in a cocoa producing region? What about war?
http://www.forbes.com/feeds/ap/2007/07/06/ap3890788.html
This is the reason for the recent surge in prices of cocoa, though the article rightly points out in the long run it is unlikely to have a large impact on the price of a chocolate bar, what is important here is to observe the connection between politics and the prices we pay. Uhmmm....gasoline prices anyone?
How might the ups and downs of these prices be avoided in the future? What can be done about the volatile nature of gasoline prices? Ideas???
Three more weeks and we are back in school!
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6 comments:
Firstly, I LOVE chocolate. And like most other chocolate lovers, a 10% increase or more would probably not prevent me from buying a choc. bar. If a chocolate bar is $3, a 10% increase is only 30 cents. No big deal.
The same concept should apply for gasoline, except that people need much more gas than chocolate. In the gas market consumers have many possible responses, unlike in the cocao market. Possible responses include an increase in the sale of hybrids and use of mass transport. But many Americans will buy an SUV regardless of the gas prices, similar to my disregard to choc. prices.
An interesting scenario occurred in Argentina a year or so ago-- Shell increased their oil prices by a few centavos, and Kirchner called for a nationwide Shell boycott. This shows the different responses between developed and developing countries.
I just hope that Kirchner doesn't boycott Swiss chocolate! ;)
Definitely everything we pay is in some way related to the relationship between supply and demand. If the demand is high, prices rise because producers are not able to supply enough of the product. If demand is low, prices will fall because there will be a surplus of the good.
That is why during Valentine's prices are remarkably high...at least in Korea there's a very notable difference. The three days before Valentine's day is the time when chocolate selling reaches its peak, EVERYONE wants to buy and apparently there is even a deficit of the really expensive foreign chocolate that always kind of sits there on the counter usually.
Anyways..the price of a product not only depends on the demand but on the price of the factors that make up the product, naturally. And of course, war occurring in the source of these factors is detrimental to the price of these factors. Because the cocoa only makes up a small part of the chocolate as a whole, the chocolate industry does not face such a big increase in price with a civil war going on in Ivory Coast. However the relationship between gasoline and oil is different. With a war going on in Iraq, which contains a huuuge oil reserve, prices notably rise. Which, like tyler pointed out, can cause responses such as the increase in the sale of hybrids and use of mass transport. In my case because remis and taxi prices have risen sooo much since i got to Argentina (from my house to school it used to cost around 10 pesos...now its almost 20!!!), i had to turn to the buses and the trains.
To wrap it up politics and government intervention certainly have a big effect on products..the government affect prices using taxation, wars and woah..I had no idea Kirchner had called for a nationwide Shell boycot!!! very interesting...well the scope of the effect these interventions have on the markets of the products depends on the products themselves. As mentioned above, a civil war in Ivory Coast does not affect the price of chocolate that much..but a war in Iraq definitely affects gasoline prices! The effect on the markets does also depend on the elasticity of the products. Demand could stay high for these products regardless of the politics if they are very inelastic..in my case, i like chocolate and like to buy it once in a while..but if prices rise i'm not sure i would..but chocolate is a very addictive product and i know lotsss of chocolate lovers who wouldnt relle mind :P Long live the chocolate market! :D
With a increase in the price of chocolate, I don't think it would affect people too much. Most Americans buy based on "name brands" and what they're used to. So just because the price of a Hershey bar goes up a little, I don't think Americans will change from Hershey to Nestle (for example). Also, like gas, the prices for EVERYTHING in the states have gone up - I'm realizing that every time I shop. Who knew a container of strawberries was $4.00?????
Chocolate is chocolate. It's a comfort food and is really relatively reasonably priced. (wow, tongue twister!) I will continue buying chocolate just like I have continued buying most products whose prices have gone up. But unlike gas, chocolate isn't a necessity so that may be the dividing factor between the two products and how they survive in the market.
..by the way, I really like Debbie's detailed explaination (with politics, economic terms, etc.) You must have a lot of time on your hands :) I don't really know all the things Kirchner has done, but I highly doubt the increase in price of chocolate is the biggest of his worries, but I'm sure similar situations can play more into effect, such as the gas example Tyler explained...
Well the increment of chocolate prices would not affect much on consumers like us. This is because we get chocolate as snacks and we do not get it in a big quantity, therefore the impact won't be huge on us. However, those who buy chocolates/cocoa for their business(eg; ice blended chocolate stalls,bakery shop with chocolate cake..etc.) would face a huge increment in their expenses. Therefore, it might really cause the change of choices in the brand of chocolates these people use.
Gasoline is just like chocolate, with the exceptions that its demand is alot higher and it involves everyone who owns a car! The price of gasoline can be controlled if the government is willing to subsidize. If so, the increment in gasoline price would not burden the consumers much.
Well, i dont think its a huge deal if prices go up a little. Cocao is a renewable resource it seems taht this is just a short lived price increase. If the price goes up, more people start growing cocao plants to make money. Compitition will climb and prices will go down. Even if this dosnt happen and chocolate gets more expensive, I dont really mind I'll just eat some ice cream to fill the void in my life.
First, sorry for not blogging in a while, I had not been able to access a computer.
The fact that the price of chocolate has gone up is really not a great problem. The majority of us will probably not even notice the difference of a slight price change in a chocolate bar, and it will not affect a consumer very greatly. Chocolate does not play such a big part in a consumer's life that a change in price can alter it drastically.
However, gasoline plays a much bigger part in a consumer's life, seeing as he depends on it for many daily things (transportation, the delivery of goods, etc). Wen the prices of gasoline increase, people are forced to change their lifestyle in order to adapt to the higher prices. No one will change their lifestyle just in order to be able to continue to buy their favorite chocolate who's price increased by maybe 50 cents. It all depends on how necessary a good is.
Of course, politics plays a major part in determining the prices of the good, no matter how important they are. Political instability in an area where a certain good is produced will always increase prices, as can be seen with the Iraq war and the consequently increasing gas prices. Also, limiting the import of certain goods will make it more scarce and therefor increase the price as well. I have just returned from Germany and was amazed at the increased prices here and the fact that many foreign products are suddenly much harder to find and much more expensive, as their imports have become more rare.
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