Factors Affecting The Demand And Supply

The demand for a meat is the desire or willingness to have that meat by the consumer. The consumer has a limited amount of money or constrained budget. To satisfy the needs of the consumer, there is a need of proper purchasing power to get that product. In other side, supply of a meat is the amount of marketed meat that a consumer can have in the market. There are certain factors that affect the demand and supply of the meat (Lagi et al. 2015). For the demand, the determining factors are the price of the product, the price of the related products, income of consumer, taste and preferences, total number and change in the number of consumer in the market, expectation of the consumer about the future prices. For the supply, the determining factors are prices of the product, prices of the related products, production cost, natural and environmental condition, production technology, transportation cost and condition and different policies of government in Australia (Henchion et al. 2014).

The most important factor is price and price of the related product. Meat has good number of substitutes throughout the world and especially in Australia (Mla.com.au. 2016). In the following discussion, there is an elaboration of the above topic with the use of diagram.

As discusses above, the determination of the demand and supply of meat depends on various factors. Among these factors, only change or variation in price of meat indicates a movement along the demand and supply curve. There may be upward or downward movement.  Factors other than price, causes demand and supply to shift from its original position.

Factors affecting the demand of meat:

In determining the role of various factors, price plays most crucial role. In the following, there is a discussion of various factors in determining the change in the demand for meat.

In discussing the impact of price, there is a rule or a negative relation between prices of a good and the quantity demanded, for a normal good. Here meat is a normal good. Therefore, there exists a negative relation between the meat price and meant demanded quantity. If the price of meat rises, quantity demanded for the meat falls and vice-versa (Linehan et al. 2013).

In case of related product- price, Meat has various substitutes like beef, pork, lamb and fish. All the products satisfy the needs of the protein. They are very close substitutes. Therefore, the change in the price of the other substitutes or complementary product has an impact on the quantity demanded for the meat. The rise in the price of substitutes raises the quantity demanded for meat (Mla.com.au. 2016).

Income has an impact on the demand of meat.  Suppose income of the consumer increase. As meat is the normal goods, quantity demand of meat also increases. Therefore, as the income increase for many consumers, increases the quantity demanded for meat in the market (Storer et al. 2014).

As per the discussion of Storer et al. ( 2014), taste and preference also has an impact on demand, If, the consumer taste and preference regarding the meat increases, it raises the quantity demand for the meat.

Total number of the consumer is al also a determining factor of the demand for meat. As the number of meat consumers increases in the market, there is an increase in the demand for the meat.

Expectation About the future price plays a crucial role. If the consumer expects there is a fall in the price of meat. Then speculation of consumer results in decrease in meat consumption for that period and increase in meat for the future period.

There are several factors affect the supply of meat these are:

Price of meat has a positive relation with its quantity supply. If the meat price increases, it raises the motivation of supplier to increase its supply. The supplier gets greater profit for the increase in price of meat.

In case of production cost of meat, there is some cost associated with meats to produce it in the market. If the cost of production falls, it raises the supply of the meat and if the production cost of meat rises, it decreases the supply of the meat.

Climatic condition causes the variation in the supply of meat. The favorable natural and environmental condition hinders or helps to decrease or increase the supply of meat.

Production technology plays a crucial part in the quantity supply of meat. There is no use of conventional o classical method of meat farming. In the recent day, various scientific methods are there for production process of meat. This saves time and makes consistent supply of meat according to its demand (Kotler et al. 2015).

As the cost of production, low transportation cost is very important factor for the meat. In Australia, most of the meat-farming areas are in the village. However, the major part of the demand is in the town or downtown area. Therefore, there is a transportation cost for the supply of the meat. Due to low or high price of transportation, the supply price of the meat decreases or increases respectively. This increase or decrease in the supply price of meat affects the supply quantity of meat (Preston and Willis 2013).

Government of a nation determines various factors regarding the supply of the product. Government issues various policies; amend various rules regarding the supply of different amount of meat. This also results in variation in the supply of the meat (Karemera et al. 2015).  

In the following, there is diagram. With the help of this diagram, there is a discussion of the demand and supply of the meat and their determining factors. In this diagram, the horizontal axis measures the quantity of meat and vertical axis measures the price of meat. The demand curve, as already discussed, the demand for meat has a negative relation with the price of meat. Therefore, the demand curve has negative slope. Similarly, the price of the meat has a positively relation to price. Therefore, it has a positive slope. The determination of equilibrium price and quantity of a meat is in the intersecting point of the demand and supply curve (Mla.com.au. 2016).

Now, the other factors are also causing a shift in the demand and the supply curve. This following graph is relevant in this aspect:

Figure 1: factors determining the supply and demand of meat

Source: created by author

In this above diagram, P^* is the equilibrium price of meat and Q^* is the equilibrium quantity. As the meat is a normal good, fall in the price increases it consumption. Therefore, there is an increase in the demand for the meat. As discussed above, variations in the taste and preferences, income of the consumer, price of the related means substitute or complementary products, expectation of the consumer and number of the consumers is resulting a shift in the demand in the demand curve from the original position. Similarly, increase in supply price of meat results in increasing supply of meat. Factors affecting the supply causes shift in the supply curve (Preston and Willis 2013).

The meat is very important foods. It is a supplier of protein. There is an increase of meat consumption in Australia. The various factors determine the demand and supply of the meat. From the above discussion, price of meat is the main factors of demand as well as the supply of meat. There are some other variables and factors, as discussed above play a crucial roles. Therefore, there is a requirement of increasing quality along with the quantity of the meats to meet the increasing needs of the consumer taking into account their health perspective.

Meat supplier should maintain a consistency to meet the growing needs of the demand of the consumer of meat.

Henchion, M., McCarthy, M., Resconi, V.C. and Troy, D., 2014. Meat consumption: Trends and quality matters. Meat Science, 98(3), pp.561-568.

Karemera, D., Koo, W., Smalls, G. and Whiteside, L., 2015. Trade Creation and Diversion Effects and Exchange Rate Volatility in the Global Meat Trade. Journal of Economic Integration, pp.240-268.

Kotler, P., Burton, S., Deans, K., Brown, L. and Armstrong, G., 2015.Marketing. Pearson Higher Education AU.

Lagi, M., Bar-Yam, Y., Bertrand, K.Z. and Bar-Yam, Y., 2015. Accurate market price formation model with both supply-demand and trend-following for global food prices providing policy recommendations. Proceedings of the National Academy of Sciences, 112(45), pp.E6119-E6128.

Linehan, V., Thorpe, S., Gunning-Trant, C., Heyhoe, E., Harle, K., Hormis, M. and Harris-Adams, K., 2013, March. Global food production and prices to 2050: scenario analysis under policy assumptions. In Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Conference Paper (Vol. 13).

Mla.com.au. (2016). Cattle projections. [online] Available at: https://www.mla.com.au/prices-markets/Trends-analysis/cattle-projections/ [Accessed 11 Aug. 2016].

Preston, T.R. and Willis, M.B., 2013. Intensive beef production. Elsevier.

Storer, M., Hyland, P., Ferrer, M., Santa, R. and Griffiths, A., 2014. Strategic supply chain management factors influencing agribusiness innovation utilization. The International Journal of Logistics Management, 25(3), pp.487-521.