Market structures in the Agriculture industry

Market structures in the Agriculture industryThere ar many types of marketplace structure which be holy argument, pure monopoly, monopolistic competition and oligopoly. The market structure of Agriculture is perfect competition and sometimes referred to as pure competition. Agriculture unwavering is a perfect competition because it market structure characterized by a large number of unanimouss so each of the firm in perfect competition produces an insignificant role of total market output and thus that no single firm can influence or control over the ruling market footing. (Geoff Riley, 2006)Besides, the cultivation carrefour is said to be standardized or homogenous. Its means that, agriculture fruit is a crossing where buyer cannot differentiate in terms of quality, packaging or labeling. Therefore, in agriculture market customers dont cathexis which specific firm they buy from because it is absolutely identical. Therefore, the firms cannot charge different monetary values for the very(prenominal) crop in the market. (AmosWEB Encyclonomic)Besides that, There ar freedom of submission and exist from the market in perfect competition. This type of market is viable in the long run and no firm will rule the market and evict other firm. (Geoff Riley, 2006)Furthermore, each firms harvest-tide supplied to the markets that are prefect substitutes for the product of others firms, so the charter for each firms product is perfectly elastic. Therefore, the firms in the perfect competition fool no power to set the hurt they have to sell the product at the going market expenditure. This type of firm are said to be expenditure takers. (AmosWEB Encyclonomic) As a expenditure taker, individual firms in perfect competition will sell their product at the sense of proportionality price. This can be shown in both introduce 1a and figure 1b.Market FirmPrice PriceSP* PDQuantity Quantity discover 1a Figure 1bAt the equilibrium price, the measure bespea k and quantity cede of the market is balance. The equilibrium price can be shown in figure 1a, where the supply and imply curve intersects with each others. The equilibrium price is at P*.At any price below P*, the market shortage of the product would exist. At this price the quantity demand is higher than quantity supply therefore it will causes excess demand in this product. Due to the product shortage, the buyer would bid among themselves for the limited supply and price would rise to hap the shortage. (Grey turn off and Steven Kemp, 2000). Conversely, if the price is above the P*, the market surplus of the product would exist. Therefore, it will cause excess supply in this product. Sellers will urgency to eliminate the surplus by lowering prices. That is because, when the price falls, the quantity of demand would rise to eliminate the shortage. (Grey Parry and Steven Kemp, 2000).When either supply or demand channelises, the equilibrium price will change. As shown in figure 2a below, the adjoin of food demands from D1 to D2 cause the both price (P1 to P2)and quantity s old(a)(Q1 to Q2) to maturation. At the old equilibrium price of P1, quantity demanded will now greater than the quantity supplied. Therefore, the excess demand will result the quantity supply campaign along the supply curve to a higher equilibrium price where the quantity of demand and supply is once again in balance. A decrease in demand for food would have the opposite effect, the equilibrium price will decrease and the quantity also will decrease. (Grey Parry and Steven Kemp, 2000)Food PriceD2 SP2 D1P1Q1 Q2 QuantityFigure 2aA change in demand will result in number of factors which areBio-fuel production increaseFurthermore, the diversion of food for making bio-fuels has lead to change magnitude demand for bio-fuel raw material, such as wheat berry, soy, maize and so on. Therefore, the change magnitude in biofuel production causing less food available for tender consumption and the price of food crops were increase dramatically. The most clearly typeface are the use of corn in the United States for the production of biofuels. In the about 25 to 30% of corn output in the US is used for ethanol biofuels. (CNET News, 2008 )Biofuels have forced spheric food prices up by 75 per cent and these prices are higher than the previously estimated, a study by the recent report of World Bank (Sumanjeet Singh, 2009)As shown in figure 2b below, when the supply of food increase from S1 to S2, the food price will fall from P1 to P2 and the quantity demand will be causal agent along the demand curve to a new equilibrium price where the supply curve intersects with demand curve. Finally the new equilibrium price and quantity will P2 and Q2 .Food PriceD S1P1 S2P2Q1 Q2 QuantityFigure 2bA change in supply will result in number of factors which areNatural hapFirst and foremost, that cannot denied that the natural disaster bring a seriously influence on the food production. T he overcome drought happened in Russia last year damaged a for the most part number of wheat crop and cause the Russian government to retire from grain export for the year. Seriously flooding in Australia also alter wheat crops and causes some of the crops were downgraded for use only as animal food. Consequently, the wheat crops were faced shortage in the past year and cause the price of grain food has risen sharply. (Dr. Grary Peters, 2011)Negative climate changesBeside that, the word agriculture suppliers were significantly decreased due to the global heating plant. Therefore, in the global warming period will result in additional price increase for the most important agricultural crops such as rice, wheat, maize, and soya beans. agree to the International Food Policy Research Institute showed in December, it states that the global warming will increase the price of corn, wheat and rice by at least two-thirds by 2050. (Bloomberg, 2011) Beside that, according to the Integrat ed Regional training Networks, IRIN, it state that within the next four decades maize prices could rise by up to 131 percent due to the global temperature and some of the African husbandman might have to give up agriculture if the weather are getting hotter. (IRIN News, 2010)