Earlier we mentioned that supply of organic food may

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Earlier we mentioned that supply of organic food may be price inelastic due to the 3-year transition period and the certification requirements – can these be overcome?
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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 Evaluation: The cost efficiency factor (supply) may be more important to determine the output of organic food in the short run . This is because the switching costs are much higher for farmers: regulations, three years of fallow ground, uncertain yields . The price they receive for a single unit of an organic product, therefore, is less valuable if it comes with greater risk and uncertainty. The organic market can only grow as far as farmers are willing to start growing organics.
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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 Evaluation: However, the income factor (demand) will be more important to determine the output of organic food in the long run because demand for organic food is income elastic . As the affluence level increases, the demand for organic food will increase significantly. Luxury consumer goods such as organic food will continue to replace necessities, as high-income consumers can afford to pay for product attributes that are perceived to be healthy or good for the environment. As a result, many agricultural producers have found organic production practices to be a profitable alternative to conventional crops. Furthermore, though transition costs are high, the cost advantages of eliminating chemical and fertilizer bills, together with crop rotation advantages can contribute to net returns . Therefore, we may see a potential growth of the organic food market.
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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 Conclusion: Consumers’ interest in organic food has exhibited continued growth for the past two decades, which has attracted entrepreneurs and corporations seeing a big potential for this industry. This led to the creation of standards and regulations to guide the organic food industry. There are clear challenges on both demand and supply sides. Consumers are becoming more sophisticated in their purchasing decisions of organic food as they become more educated and affluent, and companies are focusing on supply chain management in order to ensure high quality, traceability, and supply continuity. The future extent of the increment in organic food output will depend on the market forces (market value).
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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]
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Essay Q2: As globalisation continues, the tearing down of trade barriers has provided some companies opportunities for growth while it has been harmful for others. Accustomed to dominant positions in protected markets, the influx of
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