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Market Manipulations: Evaluating Forces Impacting Supply and Demand of Primary Products

This comprehensive analysis explores how various market forces, including political intervention and grower organizations, influence the supply and demand of primary products. It evaluates the effects of market manipulations, such as trade barriers, quotas, subsidies, and international agreements on local production and competition. Additionally, it discusses the role of producer boards and marketing cooperatives in shaping demand dynamics, and highlights the constraints that political frameworks impose on growers. Understanding these interactions is crucial for effective market navigation and policy formulation.

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Market Manipulations: Evaluating Forces Impacting Supply and Demand of Primary Products

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  1. Market Manipulations 90651 Explain how market forces affect supply and demand of primary products

  2. What you need to be able to do… • Evaluate interactions between market forces operating on a primary product and its market. (standard) • Evaluate and compare the effects of market manipulation on supply through: • Political intervention • Grower Organisations

  3. Market manipulations Political Intervention • Trade barriers • A country will not accept another country’s primary products because they wish to maintain their own production without competition. • Trade barriers may be imposed for biosecurity reasons.

  4. Market manipulations Quotas • The maximum quantity of primary product which will be accepted by an importing country. To protect home producers. • E.g. the EC (European Community) will only accept a specified quantity of butter and meat each year from NZ. These have to be negotiated at regular intervals.

  5. Market manipulations • Incentive grants and subsidies • Tax concessions e.g. tax concessions in the crop establishment period • International Commodity agreements e.g. GATT and CER

  6. Producer Boards / Grower Organisations • Producer organisations can affect the demand for a product in several ways. E.g. • Reduction of competition • Establishment of new markets • Deregulation • Marketing co-ops – benefits of amalgamation e.g. the dairy boards • Research and development

  7. Comparing political and grower intervention • Political constraints: • Political intervention occurs through legislation in parliament and is carried out by government departments • The major difference between political and grower intervention is that growers usually have to fit into the political constraints (limits)

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