Bacon Shortage " Baloney." But Prices to Rise

The second article that I have chosen is about shortage of bacon meat even though the price of the bacon meat still rises. In this article, it states that drought is able to increase the price of bacon and other pork meats in the following year by 10 percent. Bacon are facing shortage difficulties due to some problems. According to the chosen article, it says that when we’re coming forward to the year 2013, the supply of pork will somewhat decrease a little.

Shortage happens when the quantity demanded happens to be higher than the quantity supplied. So in this article, consumers are facing shortage due to natural disasters that has been affecting the supply of bacon. Drought is one of the reasons behind why there is less supply in bacon. This is because drought will affect the growth of the grains that is used to feed the pigs.  The production of bacon meat will obviously decrease as the farmers will have trouble feeding them. As a result, there will be a presence of shortage of bacon. This will cause the price of the bacon to increases higher than its normal level.  

Scarcity happens when consumers wants more of a good than it is supplied. Scarcity also means the failure of a consumer to get desire. A consumer is not able to buy everything they want or need due to the low income received and also the time we have is limited. With scarcity, consumers are obligated to make choices between goods. According to the article, they mention that consumers will face a decrease in bacon supply as the year 2013 comes. This will cause scarcity to exist in the meantime as consumer will still demand for more bacon because a huge majority or people usually have bacon for breakfast, especially in hotels and consumers from the States and United Kingdom.

Price elasticity of demand can be defined as the change of price that is influenced by the demanded quantity of a good. Price elasticity of demand can be categorized into three different categories which are elastic, inelastic and unit elasticity. Elastic demand happens when the quantity demanded is high that is able to change of price of a good. However, inelastic demand occurs when the price of a good changes when the quantity demand remains constant. Whereas, unit elastic demand takes place when the quantity demanded and the change of price of a good is equal. In my opinion, inelastic demand is related with this article because even though the demand for bacon stays the same, the price of it increases.

  According to the article, bacon is sold for $4.05 but the price went down to 22cents on the week before it rises up. When the price of the bacon fell by 22cents which costs $3.83, the total revenue received will also decreases. However, when the price went back up to $4.05, the total revenue received will increase again. Moreover, the bacon has poor substitution. If a good has poor substitution goods, the more inelastic the demand is. The graph below shows an inelastic demand curve, which shows that the good has zero demand in elasticity.

 “Pork supplies will decrease slightly as we go into 2013,”,  “But the idea that there’ll be widespread shortages, that we’ll run out of pork, that’s really overblown.” (Anderson, 2012). The pork supplies will decrease due to the weather change, drought .Hence, the supply of grains will also reduce as the drought will cause the land used to farm the grains to be very dehydrated. As a result, this will also cause the cost of grains to increase followed by the cost of production pig which will also increase tremendously When the cost of production increases, the price of the bacon will also go up in the market. The graph below is based on demand and supply curve of the bacon. This graph shows the demand and supply curve before the drought happens, and also the demand and supply curve of bacon during the drought where the supply curve shifts leftwards from S₀ to S₁

 

              In this article, the price of bacon is slowly increasing in the coming year. This shows that the bacon meat does not have a price ceiling in the market. Based on my understanding, I think the government should implement the price ceiling method in to the price of bacon in the market. This is to ensure that the demand for bacon to not go over the level of an unnecessary price. If the price of the bacon is higher above the price ceiling, there will be lesser consumers purchasing bacon in the market. The graph beneath shows a price ceilings graph. The price ceiling is above the market equilibrium point where the price of the pork is not binding.       

                                                                                                                

         Hence, I hope that the market will not face any shortage in the future or present. Moreover, I think that the farmers should improve their technologies used for farming to ensure that they do not face difficulties in the future while farming their grains. As it leads to problems in feeding the pigs and hogs which will eventually lead in to problems of the pork supply.