Country : India
Assignment Task

 

Task

We have used the rape seed market as an example in this chapter to help understand the working of markets. In real life, markets are not isolated but highly interdependent - what happens in one market can have effects on others. This article illustrates just such an example. 
Interdependent Markets 
Sometimes a great idea comes along that seems to hold the potential for solving a host of problems. The idea receives pub-licity. is promoted as being the golden key and everyone jumps on the bandwagon. Economists may be part of the problem in that some do take a narrow view of a problem and support solutions that they happen to agree with or which their research tells them has some benefit. However, economists will also tell you that any benefit has some costs attached to it and it is important to look at those costs carefully to assess the true worth of the 'solution'. In economics, markets are highly dependent on one another, if circumstances change in one market they will affect other markets - and the people who both use and rely on them. 
The chanty. Oxfam, has been running a campaign which presents a damning picture of the impact that the move to bioluels is having on the most vulnerable people in the world. The production of biofuel has been partly responsible for increases in basic commodity prices like wheat in recent years. The demand for the raw materials for biofuels has encouraged farmers to switch from pro-duction of some crops to others. The resulting output has been diverted between crops going for food and for production of ethanol. The result, say Oxfam. has resulted in an increase in the number of people in poverty, world-wide, of some 30 million and costing poor countries an extra $100 billion in food bills. One of the reasons, says Oxfam. is a shortage of crops (exacerbated by the disruption to supply as a result of bad 
based fuels. Oxfam suggests that the target that the EU has set for the pro-duction of biofuel will lead to carbon emissions rising 70 times by 2020. The largest producer of bioethanol in Europe, Abengoa Bioenergy, has reacted angrily to the claims and has branded the suggestion that the pro-duction of bioethanol can lead to world poverty and extreme hunger as a 'manipulation and as being 'false statements'. It suggests that production of bioethanol benefits local economies, redistributes global income, creates lobs and increases incomes. There is enough land in the world to make pro-duction of cereal-based bioethanol sus-tainable, it says. In addition it points out that in future, cereal-based bioethanol production will be outstripped by etha-nol produced from biomass. 
 

    


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  • Posted on : October 25th, 2019

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