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RESEARCH
AND CRITICAL REVIEW EXERCISE
By
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The article, Wheat hits record as global demand depletes supply, was written by
ABC News USA in 2007. The central theme of this piece of a study was to explain
the nature of the wheat market and the excessive increase in the prices
associated with its shortages in the world. For that reason, the article aims
at providing the probable reasons that explain the surge increase in the price
of wheat beyond its usual price. Furthermore, the article points that suppliers
faced difficulties in fulfilling high demand to the numerous world orders
following acute shortages in wheat production. Moreover, the author noted that
millers faced difficulties in finding wheat deliveries even when the price was
high (ABC News, 2007).
According to ABC News (2007), the author
aims at providing potentials reasons that led to rise in wheat prices hence
diminishing their level of supply. First, Australia as one of the world wheat
exporting countries experienced unfavorable weather conditions resulting in
scarcity. Additionally, the author recognized the rise in demand in some
developed economies such as China and India causing price rise. Apart from
that, some wheat producers such as the United States of America were devoted to
producing corn for ethanol hence leading to a reduction in wheat production.
The research further shows that the rise experienced in the market was as a
result of the growth in biofuel which was more economical compared to the other
sources of energy.
However, the piece of research provides
the possible solution that may be used to mitigate the prices of wheat. The
study recognizes the effort in supporting wheat farming which is a solution to
curb the global shortage. Therefore, the article stipulates that the
international community should assist in providing seeds, fertilizer, and other
farm inputs that help farmers increase wheat production in the developing
nations. For that reason, the farmers would acquire an advantage in reviving
their effort to continue supporting production. Consequently, the UN Food, and
Agriculture Organization (FAO), food index stood at 40% in 2007 as compared to
9% in 2006 in illustration presented (ABC News, 2007).
Consequently, the author shows the aspect of the economic concept accurately. As a result, the article portrays the use of the idea of consumer demand, supply, and market prices by illustrating how the rise in wheat demand in some nations such as India and China increases the prices in the world market (ABC News, 2007). The article pertains a macroeconomic level of concentration as illustrated by the piece of study. The reason is it involves national and beyond where the U.S.A and Australia are engaged in a business of wheat production. The study observes the big picture of the related problems that affect the wheat production among many countries in the world. Additionally, the demand theory is used to express macroeconomic principles and ideas (Morgenstern 1948, 166). The theory explains the relationship between the consumer requirement for goods and services and the prices of goods. In cases of acute shortage of supply, prices are bound to rise based on the law of...
