Brazilian Government Intervention: Acai Berry

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The Brazilian acai berry has been a food staple for low income families for years and a cultural symbol for generations. This berry is vital in Brazil, where it is farmed and, until recently had a relatively small market. However, after an Oprah interview the demand for acai has become an international affair. The rising demand has created a free market; however the once inexpensive food staple has become too expensive for the low income families. This report will analyse the current markets advantages and disadvantages, followed by two possible government intervention models. The examined interventions will be export tariff and price ceiling. The acai berry is a unique fruit that mostly grows in the Amazon; this limited product is wanted all over the world. The current acai berry industry is popular but has caused price problems in the domestic market. The popularity of the acai berries caused the demand to increase drastically causing a shift in the market equilibrium. This in turn has caused the price to increase as new consumers are buying the berry seen in figure 1. As it becomes a successful market in Brazil, the supply is increasing as new companies join the market. The shifts have caused the market equilibrium of both the price and quantity to increase; between 2000 and 2009 the price increased up to 6000% (task sheet figure). The market has grown drastically, the supply increasing from 104 874 tonne in 2005 to 115 947 tonne in 2009 (IBGE, 2008, 2010). This market is efficient and is generating a gross net income without any intervention from the Government. However as the acai berry is exported, the local consumers have to compete with higher prices. As the berry is necessary in the domestic market, the demand curve is... ... middle of paper ... ...138-151. doi: 10.1016/j.jdeveco Office of Industries, U.S. International Trade Commission.(2009).Export controls: an overview of their use, economic effects, and treatment in the global trading system. Retrieved from United States International Trade Commission http://www.usitc.gov/publications/332/working_papers/ID-23.pdf Rifin, A. (2010). The Effect of Export Tax on Indonesia’s Crude Palm Oil (CPO) Export Competitiveness. ASEAN Economic Bulletin, 27(2), 173–84. Stocking, A. (2011). Unintended Consequences of Price Controls: An Application to Allowance Markets. Journal of Environmental Economics and Management, 63, 120-136. doi: 10.1016/j.jeem. Tuncer, B. and P. Schroeder. 2007. Chapter 8 Sambazon - marketing the acai berry: sustaintable agro-forestry in the Brazilian Amazon. Paper read at SCP casis in the field of Food, Mobilitiy and Housing, at Paris, France.

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