To a rise in demand for organic food rising income

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to a rise in demand for organic food (rising income ↑demand ) Elaboration: Since organic food is considered a luxury good, demand will increase more than proportionately as income increases as consumers will feel more confident and compelled to spend those extra dollars towards better quality luxury goods, in this case organic foods . Example: Due to the relatively more rapid growth in emerging markets and developing economies such as India and Philippines , as the income increases, consumers shift their purchases away from higher quantities of food and into higher quality food. This analysis of the relationship between income and consumption is crucial for understanding and/or forecasting the likely future of the organic food industry. Link: As the standard of living increases, consumers are very likely to purchase more quantity of organic products .
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Discuss the demand and supply factors that determine the output of organic food and evaluate which is the most important factor. [25] Why demand may be a more important factor (Suggested Evaluation) Any perceived benefits of organic food, no matter how small, become affordable to wealthy consumers. Price premiums also become inconsequential to individuals and families with high incomes. As per capita incomes rise, we can expect a shift into organic food. As incomes increase above subsistence levels, health issues shift from a lack of food and starvation to healthy diets and nutrition . Those who can afford it will purchase products that are perceived to be healthy, including organic food, even if the purchase price is considerably higher than conventional food. (Ev of ev) However, an important implication of this is that low-income individuals in the USA, and low-income nations will be less interested in organic food, if it is more expensive than conventional food. For individuals and nations with low level so purchasing power, the perceived benefits of organic food are unlikely to outweigh the lower prices of conventional food.
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Discuss the demand and supply factors that determine the output of organic food and evaluate which is the most important factor. [25] Suggested Point 3: PES of organic food – likely to be <1 (use when demand rises) Despite an increase in the number of farmers converting to organic farming, the process has been a slow one. One reason is the high transition costs to be labelled a certified organic producer . In order to be titled a certified organic grower, one must follow and go through a three-year transition period in compliance with organic restrictions and requirements. During this time period farmers experience much lower crop yields making their costs surge; a primary element for which growers won’t go organic. Additionally, organic farm operations are subject to added fees and regulations.
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