Question

The Price of Baked Beans
As residents in the UK hunkered down at home to protect themselves from the spread of novel
Coronavirus they filled the pantries with toilet paper, sanitizing products and convenience foods.
Baked beans, one of the UK’s most enduringly popular convenience foods, are expected to
become scarce and expensive during the next months. The reason is unprecedented heavy rainfall
which has devastated crops in the main growing areas, the American state of Michigan and the
Canadian province of Ontario. A few weeks ago growers were expecting a record harvest but the
position is described now as catastrophic.
The price of a 100lb –bag of Canadian beans has soared from $27 to around $70, which
has added $0.60 to the retail price of a 15oz can previously costing between $1.50 and $1.20.
Moreover, the crop failure caused and unseemly scramble for supplies among big
canning firms such as Heinz and Crosse and Blackwell. Alternative sources being sought
includes South America, East Africa and even Romania.
Worldwide baked beans consumption is around 800,000 tonnes a year. The British eat a
healthy 80 000 tonnes, which represents 4 500 000 cans a day, with an annual retail value of
more than $200 million. The annual import bill is between $20 and $30 million.
Source: adapted from The Times.
Questions
1. Using the above information, explain and illustrate the factors which caused a rise in the
price of baked beans.
2. Analyse the factors which might have influenced the amount by which the retail price
was raised to consumers.
3. Discuss, with reference to the information in the passage, the economic effects of the
increase in the price of beans on growers.
4. Examine other possible economic effects of the increase in the price of beans.

Answer 1

1. The factors that have impacted the raise in price are:

A. The raise in demand due to the speculation that the product will not be available due to the pandemic. Since people started stocking up on bake beans since it is a convenient option and people expected the availability to decline and prices to raise, this lead a drastic rise in demand.

B. The crop failure that took place due to the unpredicted rains. Since the crop failed and the demand was high, the left over crops were priced almost double from $27 to $70 per 100 lb of the product.

2. The primary factor that caused an increase in the price of the product charged to the consumer was the crop failure. The main areas where the crop is grown experienced a failure due to unforeseen rains. This lead to a raise in price of the existing produce. This failure also caused a dis balance in the supply to big canning firms like Blackwell, Heinz. The demand for the product was still high and since the whole sale price of the product at the source increased, the final price to the consumer also witnessed the impact through a price rise.

3.since the main areas of cultivation like Michigan experienced crop failure they faced a major loss as the total produce for the year was expected to be the highest. The existing demand however gave the producers of East Africa , Romania and South America an opportunity to produce more and sell out in the market that was previously dominated by producers from Michigan. They also received the advantage of higher prices of the product.

4.when prices rise, people will want to enter the market in order to take advantage of the higher price. When the price of baked beans increased, other countries that may have production of the baked beans will want to export it to Britain. They may charge a slightly lower price as compared to the existing price in the market, and this was increase their exports.  

For the importing country this will indicate and increase the import bill further.