The Economics Of Soy
In my paper I will analyze how China's growing desire for and consumption of meat is fueling a Brazilian soybean industry. I will discuss this article from the aspect of three themes in our study thus far. These three themes are: shortage of supply, opportunity cost and oligopoly.
The article explores China's need to turn to new markets to fulfill its expanding demand for soybeans. Soybeans have been a mainstay of the Chinese diet for more than 2000 years. In fact, the area close to the Yellow River where I was raised is said to be the probable birthplace of the soybean.
Despite this historical importance there is a changing trend in consumption in China. The Chinese, long dependent on soybeans for tofu, are turning more and more to poultry, beef and pork and this increased consumption of meat requires increased quantities of soy. Soy is needed to feed these animals.
So the change in consumption has created a major problem for the Chinese. You see, the northeastern provinces of China have been the main producers of the soybean crop. Until about ten years ago this was not a problem. However, this area is no longer able to continue to produce a sufficient supply to meet the growing demand. There are two domestic reasons for this situation; a decreased water supply and lack of good agricultural land to support the growth of the soybean. In addition to the problem at home, there is one abroad in the US, China's main source of imported soybeans. Now, in the US, farmers are planting corn where they once planted soy. This is to supply a growing biofuel market. These two factors have created the dilemma for China. To offset this imbalance China has had to turn to another supplier-Brazil. As we have studied, when supplies of a product decrease and demand for this product continues to increase, an imbalance, a shortage in market supply, is created. So China is searching for a return to balance, a balance that no longer exists at home. It would seem...
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