Friday, September 28, 2012
Drizzle and Drought
http://www.economist.com/node/21563304 Due 1 October 2012. This article describes basic supply and demand concepts. Discuss the back-end costs and benefits of the olive oil industry.
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The back-end cost of the olive oil industry is by the drought. The drought is reducing the oil production by 20 percent from the past year. In addition, because of this drought, prices have risen for the extra-virgin olive oil. The benefits of the oil industry are there is an opportunity for the Californian olive oil industries. There is also opportunity for Chile and Australia markets to be active in the industry as well.
ReplyDeleteThe olive oil industry has back end costs as well as benefits. The major costs are from the drought which leave trees strained. The drought is predicted to reduce the total output of olive oil by around 20%. The drought has also increased the price of extra virgin olive oil by about 50% from previous years. There are also some back-end benefits. In southern Europe in places like Italy and Greece have welcomed this price surge. In northern Europe people have began consuming more and more olive oil. Even in America olive oil has been increasing by around 6% every year for almost 2 decades.
ReplyDeleteAs it says in this article the Olive Oil Industry has a lot of benefits but it also has a lot of back end costs. There is a drought of Olive Oil right now and that is what is causing most of the back end costs. The drought is going to reduce the total output of oil by 20%. It has also doubled the price of Extra Virgin Oil from a couple years ago. The benefits are that there many places you can have Olive Oil Industries like California and Europe and Chile and other places too.
ReplyDeleteThe back-end cost of the olive oil industry, occurs when there is a surplus of olive tonnes produced. This floods the market of olive tonnes, which consequently drives down the price of olive oil products. The drought has provided a boost for the olive oil industry because it has allowed for the price to go back up, after a year of over production. Since the demand for olive oil products is at an all time high, and the supply is continuing to dwindle due to the drought, the price for olive oil product will continue to rise. This rise in olive oil prices will benefit the new emerging olive oil industries of California, Chile, and Australia, who can’t produce as much olive tonne as Spain, but can now earn a greater profit due to the rising demand for the product.
ReplyDeleteThe drought in Spain has caused many back-end costs and benefits in the olive oil industry. The drought has caused a decrease in production of olive oil, which will have back-end costs on the price of olive oil for consumers. However, there are also some back-end benefits of the drought. It causes the smaller producing countries of olive oil to have a better benefit, because the price is increasing.
ReplyDeleteThe drought in Spain has affected the oil industry, causing the production to decrease. The prices for extra virgin olive oil have increased. Italy and Greece, the next big producers are responsible for another 20%. Europe, themsleves are doing pretty good. The oil industry has quite a few providers that are not usually associated with olive groves, so the oil industry isn't really in that much trouble.
ReplyDeleteJaime Caldaro
ReplyDeleteOver the years Spain has been producing too much olive oil and has driven the price down. The recent drought in Spain had caused olive production to decrease oil production. Which is leading to less production of olive oil and the exporting to other European countries. Other countries will suffer by being able to import less making prices clime because of scarcity. The next two producers will have the opporurnity to export more if they produce more. So this "shortage" is actually helping the olive oil industry bounce back with responsible prices for their product, While giving new places like California, Chile, and Australia
For years there has been an overproduction of olive oil in Spain which has driven the price down. The drought in Spain caused a decrease in the oil production which led to less exporting to other countries. Because of this, there will be more of a scarcity of olive oil in other countries and the price will be driven up. The high demand and rising prices will benefit the new emerging olive oil industries of California, Chile, and Australia, who can’t produce as much olive tonne as Spain, but can now earn a greater profit due to the rising demand for the product.
ReplyDeleteJacob Hochman
DeleteSpain's drought caused back end costs in their olive oil industry, but benefited smaller producers of olive oil. The drought caused a decrease in production, which inevitably caused the price of olive oil to rise for consumers of the product. The drought did have some benefits to olive oil producing countries that were not affected, giving them the advantage of selling at an increased price without having to cope with the drought.
ReplyDeleteSome of the most significant back-end costs of the oil industry arise from the variability of oil production as a result of weather patterns. Currently, the drought in Spain is causing the back-end costs to be passed on to consumers, as prices for oil are drastically increasing. However, smaller oil-producers appear to be reaping the benefits of the Spanish drought, as their oil business is currently experiencing a surge due to it's cheap value. Another back-end cost of this drought may well be a decline in stock value of Spanish oil that is associated with the increase in prices. Less supply means higher prices.
ReplyDeleteScarcity has brought back-end costs for olive oil consumers around the world. Spain, the leading producer of olive oil in the world, is currently experiencing a drought and is not producing as much as they have in the last couple of years. According to the article, the demand for olive oil has only risen in places such as England,Germany, and the United States. This means that because the supply of olive oil is less than usual the prices will rise as a result of decreasing supply and constant or increasing demand. The benefits of the olive oil industry right now are basically because the demand of oilve oil is rising and it is becoming more difficult to produce, with that, companies can raise the price of olive oil and help boost the industry. Smaller producers in the olive oil industry benefit directly from the scarcity through the earning of greater profit now that the good is less available.
ReplyDeleteThe back-end costs of the olive oil industry takes place mainly when there is a surplus in the product produced. Because of this, the olive markets are too full and the prices drop. Due to the drought and 20% decrease in output of olives, the price will be driven up. This will benefit the industry as the past prices have been lower than wanted. People are in serious want of the products. Consequently, there's less product. This will force the prices to rise. But when partnered with the drought, the prices will shoot up. Because of this high demand for olive oil with the new problems of drought in Spain, other countries will be sure to be able to profit and boost their own economy through this mercantilism.
ReplyDeleteThere are many costs and benefits within the olive oil industry. A major cost is the reduced price of the olive oil when there is a major surplus in the production. Another cost is the condition the trees are left in which do not allow for the same amount of production they once had due to all the strain placed on them. Spain, the largest producer of olive oil has suffered a drought which has reduced their total global output nearly 20%. The benefits of the olive oil industry lie within the other producing countries which are not affected at the moment by a cause such as a drought.
ReplyDeleteThe backhand costs are that prices from
ReplyDeleteSpain are going to increase but many people will turn away from Europe's oil toward cheaper countries. The shortage opportunity will benefit California's, Australia's and Chile's olive growers. Consumers will have more choices and cheaper prices as more growers compete with Spain.
The drought brought back-end costs of producing olive oil. The back end costs are the low prices from the previous year's surplus of olive oil. Now that supply has decreased, the prices soared. Spain's output has decreased 20% even though it is the world's largest olive oil producer. The benefit of this is other countries have picked up the lost 20%. Countries, other than Spain, that have not been affected by the drought has started producing olive oil to meet demand.It allows the olive oil industry to expand globally.
ReplyDeleteSupply and demand affects the cost of everything. With the olive oil industry, supply is helping and hindering some countries. The back-end cost of olive oil is the drought that has brought production of olive oil down by 20%. The benefits of this however, are that the shortage of supply will call for an increase in price for other countries that produce it.
ReplyDeleteThe main back end cost of the oil industry is the drought because it hinders any production from occurring. When the drought occurs there is a deficit in the supply of oil and the demand is constantly growing! So the price of oil will go up when there is a deficit in the supply and a surplus in the demand. The benefits of the oil industry are the ever growing demand for EVOO around the world where Spain is profiting significantly from!
ReplyDeleteThe back end costs of the olive oil industry are that, due to the 20% reduction of the global output, prices have risen by over 50%, to about $3400 a tonne. This puts the cost on the consumer, not the producers, making them spend more for the olive oil. Yet, the benefits of these recent events have been that the prices have gone up from last year’s prices that were a nine year low. This was caused by overproduction. So, with these increased prices, smaller industries in California, Chile, and others can benefit from the high prices. So, even without making as much of the product, they still make profit.
ReplyDelete