Brazilian Government Intervention: Acai Berry Essay examples
996 Words4 Pages
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…show more content… This is shown as the price greatly increases and the quantity decreases slightly. It is also important to note that the Acai palm has strict conditions of where is can grow, and although the palm is ecologically sustainable the supply will not continually increase with the demand (Brondizio, 2011). This will cause further problems as the demand continues to grow, the low income families who need the berry as a staple food will be unable to afford acai. Free markets are considered inequitable because of the lack of equality; if the government were to intervene they would promote equity. The Brazilian government could stabilise the economy and lower inflation and promote economic growth (Coglan, 2013, pg312). The export tariff is something that the Brazilian government should consider as a possible solution. By imposing an export tax fewer companies will export acai; preferring the tax free domestic market. This will shift the supply curve to the right, causing the domestic cost of the berry to decrease as seen in figure 4. In the international market, the reduced supply will cause the price to increase, benefiting the local producers.
The proceeds of the tariff would go to the Brazilian government, as shown by the purple rectangle from figure 3. This could possibly be used to support the producers or the low income families. If the government did intervene then they could control price fluctuations; if the production levels were small, the Brazilian