Reference no: EM132518483

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.

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.