26-ocr585feb2011sample

26-ocr585feb2011sample - Page 15 registered banana growers...

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Page 15 www.tutor2u.net registered banana growers in the Windward Islands has fallen from about 24,000 farmers in 1993 to about 5,000 in 2005. The move away from trade preferences to ACP countries means that Caribbean banana exporters are likely to face strong competition from more efficient African and Latin American producers. Economists at the IMF have estimated that - on the basis of an EU tariff level close to the current 176 per tonne and individual country supply elasticities - banana production in the Windward Islands countries would decline by between 11-21 percent from its end-2005 level. Trends in World Banana Prices Figure 1.1 on page 5 of the pre-release materials is a price chart for bananas – it is reproduced below The world price chart shown on page 1.1 is not sourced and must be taken with a note of caution. It might be drawn from retail prices in the world’s biggest market - the United States. The data shows nominal prices in international markets – i.e. measured in US dollars per tonne at current market prices. As we shall see, adjusting for the effects of inflation, the trend in the real world price of bananas is different and this has important implications for producers. Interpreting the data chart: The chart shows a seasonal pattern to prices with the US dollar price rising sharply at the start of each year - can you think of why prices tend to rise strongly in the early months of the year? From 1997 through to 2003 there was a general downward trend in prices - the average was close to $500 per tonne before prices dropped to just under $300 per tonne in the spring of 2003.
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Page 16 www.tutor2u.net Thereafter, up to the end of 2009, and stripping out the seasonal pattern, there is a clear upward movement in prices - the peak for the time period shown was over $1000 in the early months of 2008 but prices have stayed well above $600 per tonne since the start of 2007. Points to be aware of when using this data chart 1. The vertical axis has been shortened and has the effect of amplifying the apparent changes in prices 2. The chart shows world prices and not total export revenues for banana producers 3. The price is expressed in US dollars – this is standard as many commodities are priced in dollars. But for trade between the EU and non-US banana growers other currencies might be used 4. Please don’t assume that the prices shown here are those that find their way to banana growers – one long standing controversy is that growers often receive only a small percentage of the world price or the price that we pay for our bananas in the supermarket.
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This note was uploaded on 02/08/2012 for the course ECO 51844 taught by Professor Sabet during the Spring '11 term at FIU.

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26-ocr585feb2011sample - Page 15 registered banana growers...

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