ECON 220W Economics in the news

Assignment 1 and 2 Instructions

Simon Fraser University

Write and properly edit a 500 - 700 word essay in APA style. Critically analyze the newspaper article “Pulse crop prices jump in Canada, even as supply grows” by Kyle Bakx. You will be comparing your calculated supply elasticities with those found in literature.

Assignment 1 -

You may choose to work in groups of two. Submit one paper only.

Answer questions about the economic content in the article. Submit your answers in order on looseleaf paper, handwritten, single sided, one staple in the top left corner, and name(s) and student number(s) in the top right corner.

Presentation counts. Messy work that is difficult to read will not be marked. Graphs must be drawn with a ruler.

Assignment 2 -

You must work individually on the written assignment.

Conduct a critical analysis of the information presented in the article, specifically elasticity. Your final paper should be 500 - 700 words and written in APA style. Below are a few steps to help get you started.

Prepare a proper APA template for the paper (i.e. margins, title page, references page, running head, etc.).
Write a summary of the article.
Write the proper APA citation for this article.
Find information about price elasticity of supply for pulses in the literature. e. Do your calculations make sense?

Pulse crop prices jump in Canada, even as supply grows

Farmers boost production to capitalize on drought in India

By Kyle Bakx, CBC News Posted: Feb 18, 2016 5:00 AM ET Last Updated: Feb 18, 2016 5:00 AM ET

Canada exports pulses to countries such as Turkey, Egypt, China and Bangladesh, but the biggest market is India. (Wikimedia/Creative Commons)

The little-known pulse industry in Canada is enjoying a financial boost as crop prices rise to record levels this year.

Some farmers are choosing to grow more peas and lentils in hopes of a lucrative year as overseas demand grows.

"There have been prices this high before, but it was when the industry was very small," said Jean Harrington, who operates a 3,000-hectare farm near Glenside, Sask. "This industry has grown exponentially over the last 10 years."

Farmers are reacting to the price jump by choosing to plant more pulses instead of cereal crops. For instance, the amount of dry peas planted is forecast to increase by 14 per cent in 2016, while lentil plantings will grow by 13 per cent, according to Agriculture Canada.

Twelve months ago, yellow peas were selling for about $7.50 a bushel and have since shot up to between $12.75 and $14. Red lentils were about 27 cents a pound, but are now trading between 45 and 57 cents.

"These are very high prices for a product now that is essentially a commodity, not just a niche market," said Harrington.

Prices on store shelves could also climb, but it likely won't lead to sticker shock for most people. Canada exports the vast majority of pulses grown in the country.

"In fairness, most of us don't buy enough pulses that we even look at the price," said Harrington. "The majority of the price escalation is because of overseas."

Pulses include peas, chickpeas, beans and lentils.

The pulse industry has operated in relative obscurity in Canada for many decades, but the popularity of the food is growing. The sector has experienced rapid growth in production in several provinces.

Pulses are also a trendy item, according to many food writers, considering they are flexible and easy to use.

Compared to meat, pulses are a relatively inexpensive source of protein.

The United Nations declared 2016 the international year of pulses to "heighten public awareness of the nutritional benefits of pulses as part of sustainable food production aimed towards food security and nutrition."

Low loonie

Canadian prices are benefiting from the low loonie, since most pulses are traded in American dollars.

Canada exports pulses to countries such as Turkey, Egypt, China and Bangladesh, but the biggest market is India, which is experiencing its second straight drought year.

"Everybody's watching the weather in India. They are by far the largest importer of lentils this year," said Mike Davey, a market analyst with Manitoba-based FarmLink Marketing Solutions. "India is a strong importer for the balance of this year and then again next year as well."

Canadian production of pulses and special crops, such as peas, lentils, chickpeas and beans, rose from about one million tonnes in the early 1990s to 5.7 million tonnes in 2014.

The majority of Canada's peas, lentils and chickpeas are grown in Saskatchewan. The province exported $2.5 billion worth of lentils in 2015.

Retrieved from http://www.cbc.ca/news/business/pulse-crops-lentils-canada-prices-agriculture-1.3450271

Conduct an economic analysis. What is the relationship between pulses and cereals as described in the article?

Use a Supply/Demand diagram to show the market for pulses. Show both the Canadian market and the world market on the same diagram. Do not consider the exchange rate. Explain your diagram.
What further effect does the exchange rate have on the Canadian market?
Calculate the price change factoring in the exchange rate. Specifically, find an online source with exchange rate data and calculate the price of dry peas and lentils in February 2015 and 2016. Cite your source using APA style.
Calculate the price elasticity of supply for both yellow peas and lentils. Use both US prices and CDN prices (i.e. after adjusting for the exchange rate).
Explain how changing attitudes coupled with the UN marketing scheme will change the pulse market in the future. Using your answer and the information in the article, would you expect the price of lentils to increase, decrease, or stay the same for next year?

Write about the article.

(a) Prepare a proper APA template for the paper (i.e. margins, title page, references page, running head, etc.). (b) Write a summary of the article.

Write the proper APA citation for this article.
Find information about price elasticity of supply for pulses in the literature. e. Do your calculations make sense?