Economic Analysis of Coffee in Vietnam

Economic Analysis of chocolate in VietnamGroup members Huynh Anh Tin, Pham Le Bao Tran, Pham Le Thien HuongVietnam cocoa market structureVietnam cocoa market structure is oligopoly, because thither be a few firms that progress to the ability to enter this fabrication, and with many similar product taste (Sloman, Garratt, 2013). The output of chocolate is expensive, it include down, machine, labor, and material. drinking chocolate muchover grows in high land bea of Vietnam, so the investors put on to buy large land and displace forest. The labor forces are the farmers, who kick in years of experience on maturement drinking chocolate, are paid to grow the java to export over sea. receivable to deep brown planting become popular in Vietnam, Vietnam burnt umber merchandise surpass Colombia to become the second largest coffee producers. (The popularity of coffee to a greater extent over, there are alike almost brands of coffee product such as Trung Nguyen, Y 5, Vina, etc. Most of Vietnam coffees are export to countries such as England, United States, Japan, Korean, Hong Kong, Italy, etc.Elasticity of DemandVietnam has many coffee distri just nowors, so there will be many different determines of coffee. Coffee value will also channelize because of the valet de chambre market price change everyday. However, Drinking coffe is a Vietnameses culture for years so even if price change the customers are still buying the coffee. Coffee defines tribe focus, smarter, gain energy, release stress (Gunnars, 2013) . Because coffee is consisted of caffeine, so some of customers enkindlenot quit coffee. And it takes a clump of time to find separate rest or to stop drinking coffee. Coffee Culture is increasing pile also make consumers adopt more coffee than before. Rise of other(a) culture coffee makes consumer curious and want to taste the different coffee style. And young people also drink coffee to prove that they are already grow up. base o n the survey of director of Thu Ha company, Thu Ha company produced 100 ton per year but merely 30% of product was exported and the rest was consumed in domestic. It proved that the pray of coffee in Viet Nam is very high and it also attracted some of big coffee distributor come to Viet Nam such as Starbucks and Coffee Bean and tea Leaf.http//www2.hcmuaf.edu.vn/contents.php?ids=8334ur=hoainamc) Elasticity in showThe growth of Vietnam coffee productivity has entered the trueity market and became the second largest coffee producer, after Brazil. Beside the growth of doing, Vietnams coffee culture is also well k straightwayn with the unique brewing style. much importeeant, coffee is the daily need of Vietnamese people, because they need coffee to make them stay awake and gain energy to focus on work. withal though price of coffee is change due to price change, coffee it self will not fall down the quantity of coffee put out. lascivious on the Hallam research, Vietnam coffee production is a strong producer, which mess elaborate from 60 578 hectares to 463 450 hectares and coffee bean output developmentd from 96 000 t integritys to 800 000 tones, make Viet Nam the largest Robusta producer and second largest coffee producer in the world. This result the affix of income of employment and decline the hunger rate. However, price of Robusta coffee has fallen because of the Arabica coffee had also fallen. Against this background, the coffee price elasticity of supply is very low, which is yet 0.13 in short run and 0.24 in the long run . Supply responses to price incentives are not balanced periods of rising prices stimulate youthful plantings and other fixed asset investments, which does not change when price fall, it after part not be replaced when it reach to the end of production. Supply responses to falling prices blend in over also been slowed in some cases by national efforts to assist producers, for suit finished price supports and debt relie f. In the short-term ad adeptments piece of ass be make to reduce inputs including labor, but creating unemployment and stimulating migration. Reduced labor input through makes the coffee are less(prenominal) care, which lowered the quality of coffee and also create a pressure on price. ( Hallam,Fig.1 Short run of coffees price elasticity of supply. Accessed April 1, 2014, fromhttp//www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-revision-on-price-elasticity-of-supply.d) Opportunity tollOpportunity constitute is the alternatives consumers or producers have to give up when deciding purchasing or producing.(Sloman, Garrett, 2013) When people have to make choice they have to lose the other alternative that involves. Opportunity cost occurs in plain purchase to complex purchase. Purchasing coffee also occur probability cost, the consumer may decide the substantially that they want, so they can satisfied their candid needs. Normally, consumers who want to have a co ffee cup to be more awake and focus on their work will have to puncture some of their alternatives to view the cup of coffee.Money The first alternative that people have to pay in order to hold back their coffee. When consumers decide to get a cup of coffee, they have to know the price of coffee that they will buy. The amount of money they spend for the coffee is the opportunity cost to get the coffee for them. However, the consumers give up the alternative of saving money, spending on other substitute, or even invest on a business. A cup of coffee may not cost the consumer a lot of money, still if the consumers buy coffee everyday may cost them more than what they think.Time The second alternative that consumer have to scarify is time. Time now is including the time the consumer have to go to the coffee shop and the time they have to wait for the coffee. The alternative that they give up is the amount of time just for travelling to the coffee and waiting for the product.In orde r to get a cup of coffee, customers have to sacrifice some of the alternatives to get the coffee they demand. finaleThe report aim to learn and understand the characteristic of the strongest product of Vietnam, which is coffee. More over, we can also learn what is the position of the product in the world market. In the report, we learn near the market structure, the demand, the supply of coffee, the elasticity of demand and elasticity of supply. In the report our group learn about iv facts First, the Vietnamese coffee market structure is Oligopoly, which has a few firms can enter and produce similar product. Second, The elasticity of demand and supply are considered inelastic, because of price cannot change the supply and demand of coffee of Vietnamese people. Third, the opportunity costs in order to buy a cup of coffee. Last, analyzing the demand and supply of Vietnamese coffee. Coffee has been a strong industry for year, however coffee supply has decreased the quantity and the q uality by the countries, which import Vietnam coffee. In order to make the Vietnams coffee become declare for both quantity and quality, finding solution and make changes in production are required to boost the production. thick the eventThe event watch over about the increase in price of coffee not hardly in Viet Nam and in the world because that is bear on by the drought in Brazil. In details, during the early 2014, a seriously drought is destroying the coffee farms in Brazil which is the biggest exporting coffee countries in the world. This would not be good news for farmers but that is great news for other exporting countries in which have Viet Nam. That also affects the selling price in Viet Nam market, the selling price for coffee increase rapidly during the early in 2014. According to this event, the priming coat for increasing selling price for coffee also concern about the speculation of firms and other organizations. For the Arabica coffee, it increases more than two times than the first long time in October, 2013. teddys in supply tootAfter drawing the curve of supply, we can see how the drought in Brazil affect the supply for coffee. Especially, the supply for coffee is very sensitive with the weather. The weather can easily affect the productivity of coffee. Of course, the supply curve will move to the left, from S1 to S2 in the curve. In this case, with the touch of the drought, it makes the selling price increase from P1 to P2 because the productivity is less than before. In some cases, the price of coffee will increase meagerly because the demand for coffee is elastic but in this case, many factors combination together from the impact from the weather and the speculation of people, which lead to the big increase for selling price of coffee. The gap from P1 to P2 will much bigger than other situations. When the selling price increase, that is also a main reason why the number of people wants to buy less than before, Q1 will move retr ograde to Q2 as well. The changes in quantity of demand for coffee will decrease follow the changes of selling price. Because the changes in the supply curve above, the new remainder point will move to the new point which is from E1 to E2. After analyzing the impact of the event to the supply curve, coffee can easily be affected by the outside factors such as environment, weather and people. P D S2 S1Pe2 E2Pe1 E1 0 Q2 Q1 Qhttp//www.thesaigontimes.vn/Home/nongsan/tintucthitruong/112433/Gia-ca-phe-tang-Cau-hoi-nup-sau-tin-thoi-tiet.htmlDemandP D1 SD2Pe1 E1Pe2 E20 Q2 Q1Summary the event in a role of apprentice, somehow the reporter was got into a factory which is producing fake coffee in Hoc Mon . Reporter was following the factorys proprietor to Kim Bien market to buy 15 arsenical material such as smell of coffee flavor, foaming agent for soap, food coloring industry and many more and blend with soya bean. Only in one day that factory can produce 1 ton of untrue coffee and deliver t o lot of coffee store from middle of Vietnam to conspiracy of Vietnam. And when reporter asked about why dont you sale the real coffee then the owner of factory just give only one reason that about the price, the real coffe was cost over 200.000 VN but fake coffee only cost over 100.000 to 120.000 to produce and sales.Shift in Demand curveAfter drew Demand curve, we can see how the scandal of produce coffee from soya bean intricate with arsenical affected to the demand of coffee. After the true was exposed on newspaper, the consumers scared to drink coffee and switching to another substitutes, then you can see the demand curve moved from D1 to D2. It makes the supplier decrease the cost to attract the consumers, at the curve you can see that P1 move to P2 and it makes a new equilibrium from E1 to E2, and besides that the quantity of coffee also move backward from Q1 to Q2http//www.thanhnien.com.vn/pages/20120718/hai-hung-ca-phe-deu-ky-2-dau-nanh-+-15-hoa-chat-=-ca-phe-18-7-2012.as pxReferencesGunnars, K., Feb 20,2013,Why Is Coffee Good For You? Here are the 7 reasons, Authority Nutrition. Accessed April 2, 2014, fromhttp//authoritynutrition.com/why-is-coffee-good-for-you/Hallam, D., Falling Commodity Price And attention Responses Some Lessons From The internationalistic Coffee Crisis, Food and Agriculture Organization of the United Nation. Accessed March 31, 2013, fromhttp//www.fao.org/docrep/006/y5117e/y5117e03.htmTopOfPageMaja, W.,2013, Vietnam Coffee Production is Blooming, as is the Coffee Culture, Tea Coffee concern Journal, p.p32-33.Sloman, J., Garrett, D.,2013, Essential of Economics , Pearson, p.p 7.Sloman, J., Garrett, D.,2013, Essential of Economics, Pearson, p.p 94.Tran, T., July, 2013 Vietnam Coffees Industry, Ipos. Accessed March 31,2014, fromhttp//www.ipsosconsulting.com/pdf/Ipsos-Research-Note-Vietnam-Coffee.pdfList of IllustrationFig.1 Short run of coffees price elasticity of supply. Accessed April 1, 2014, fromhttp//www.tutor2u.net/blog/i ndex.php/economics/comments/unit-1-micro-revision-on-price-elasticity-of-supply.