The future’s not so bright for Orange(s)?

This week, the price of orange juice concentrate on the global market hit a record high, reaching $2.12 (£1.38) a pound (0.45kg).

There should be lots of diagrammatic demand/supply analysis for micro-economists to get their teeth into here when considering some of the causes of this price rise. Firstly media reports state that there have been a variety of safety concerns about juice with carbendazim, a fungicide, recently been found in US shipments from Brazil.

On top of this another major exporter of oranges and concentrate, Florida, has suffered from unseasonal weather and cold snaps that can reduce the growing season and orange crop, limiting supply of fruit. Moreover there are reports of an increase in packaging and transportation costs which orange juice producers may eventually pass onto consumers.

In drawing the demand/supply diagrams, you may then consider how might consumers react to this increase in price?

The article goes onto consider some of the issues that might affect the price elasticity of demand for orange juice whilst realising that there are a variety of factors other than price that affect consumer demand that we should take into account. Plenty of excellent opportunities for microeconomics analysis of this case study!

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