Price Inflation: Acai Fruit

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Price Inflation: Acai Fruit

Brazil holds the record in the large-scale production of acai. This is a kind of palm tree
that majorly grows along the sides of Amazon River in Brazil. For a long time, it has been a
cultural symbol and solid food for the Brazilian low-income families (Muniz-Miret, Vamos,
Hiraoka, Montagnini & Mendelsohn, 1996). Acai berry is in a critical crop in Brazil where is
grew in large scale. In the past, Brazilian Acai berry had little popularity with low demand and
therefore relatively small markets. Recently, however, especially after Oprah interview, there is
a sharp rise in the prices of acai berry (Brasileiro, 2009). This perhaps is following the
understanding that the kernel has high nutritious value. This exercise, therefore, attempts to
understand the economic logic behind the sharp rise in the prices of acai berries in the recent
past. The study will further look into possible measures that can be placed to prevent the hiking
price of this plant commodity.

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Description

This document contains important information about your assessment. You will need to read it
carefully to understand what is required. Price Inflation: Acai Fruit.
Background
Acai (pronounced Ah-sigh-ee) is branded as a “superfood” in the USA, and as a result its price in Brazil
has risen by as much as 6000% between 2000 and 2009. Price Inflation: Acai Fruit.
You are the economic advisor to the Brazilian government and have been designated to analyse the
situation regarding the rising price of Acai as mentioned in Oprah Winfrey’s Web site (Note: You do not
need to go to Oprah’s website). Your task is to write up a critical overview of the Acai market in Brazil
and how the rising price, supported by appropriate diagrams/models, has impacted on the economic
welfare of both local consumers and producers. You are expected to provide and discuss two
intervention strategies as part of the government’s economic policy strategy to curb the rising price of
Acai. Below is an article, which has been provided to assist in your task. Price Inflation: Acai Fruit.
While it is relevant to consider social and normative issues, your essay should focus on economic
analysis and should address such aspects as consumer and producer welfare, efficiency, functions of
market and government intervention amongst other things. In preparing for this essay you should
read as widely as possible. As a first step you should read Chapters 1 – 9 of the prescribed text to get
a good understanding of the relevant economic theories. Note also that although this is primarily a
microeconomic case study, you are entitled to consider relevant macroeconomic theories/issues
where appropriate, but this is not essential. Price Inflation: Acai Fruit.

Title of Essay: Provide (i.e. Create your own) a title for your essay that indicates what you are
trying to discuss.
Word limit: 2000 with 10% tolerance. (Tables and reference lists are not in the word count.)
Appendices: NOT allowed
Abstract/Executive summary: Not required
NOTE: In week 3, more details on the essay will be provided in lecture. However, to benefit most
from it, you should start reading up the required Chapters to help better understand the essay
topic. Price Inflation: Acai Fruit.

‘Superfood’ Promoted on Oprah’s Site Robs Amazon Poor of Staple
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ai8WCgSJrhmY
By Adriana Brasileiro, May 14 2009.

May 14 (Bloomberg) — Rising U.S. sales of acai, a purple Amazon berry promoted as a “superfood” on Oprah
Winfrey’s Web site, are depriving Brazilian jungle dwellers of a protein-rich nutrient they’ve relied on for
generations. Price Inflation: Acai Fruit.
U.S. consumers are turning a “a typical poor people’s food into something like a delicacy,” said Oscar Nogueira,
who specializes in the fruit at Embrapa, Brazil’s agricultural research company.
Spending on acai-based products by Americans seeking to lose weight, gain energy or slow aging doubled to
$104 million last year, according to SPINS, a Schaumburg, Illinois-based market research firm. Since U.S.
demand took off early this decade, the fruit’s wholesale price in Brazil has jumped about 60-fold, Embrapa data
show. Price Inflation: Acai Fruit.
In 2008, exports from Para, the South American country’s main producing state, climbed 53 percent to account
for about a quarter of output, according to the local government. Production, though, has increased little in the
past five years. Price Inflation: Acai Fruit.
Winfrey, 55, discussed the berry with Mehmet Oz on her TV talk show in February 2008, when the New York
cardiologist presented his “anti-aging checklist.” It includes acai, blueberries and tomatoes.
“It has twice the antioxidant content of a blueberry,” said Oz, 48.
Winfrey’s site publishes dermatologist Nicholas Perricone’s “10 Superfoods List,” which includes the Brazilian
fruit. Meriden, Connecticut-based Perricone, 60, sells skin-care items and food supplements, including a powder
that contains the berry, according to his Web page.
Palm Trees
Acai grows on palm trees and looks like a blueberry. In the Amazon, it is beaten, diluted in water and eaten with
manioc, meat, fish or dried shrimp. Price Inflation: Acai Fruit.
The pulp provides more protein in relation to its weight than eggs and milk, and has high levels of anthocyanin,
an antioxidant, as well as vitamins E and B1, potassium, iron and calcium, according to Embrapa.
The Para government recommends its consumption. The berry is popularly associated with bone and muscular
strength, longevity and a healthy immune system, said Lucival Cardoso, the state’s chief health inspector.
“We encourage families to give acai to children as young as 6 months,” Cardoso said. “It’s also very filling;
that’s why it’s traditionally associated with low-income family diets.”
Independent Distributors and production
“We are very regulated here about what claims we can make or not make,” Larsen said in a telephone interview.

Attempts in Brazil to boost production to meet demand have had little success because of the difficulty in
obtaining land alongside riverbeds, said Alfredo Oyama Homma, an Embrapa rural economist based in Belem,
Para’s capital.
“The acai palm trees are most productive when surrounded by other trees, and they also need lots of water,”
Homma said. Price Inflation: Acai Fruit.

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Price Inflation: Acai Fruit

Brazil holds the record in the large-scale production of acai. This is a kind of palm tree
that majorly grows along the sides of Amazon River in Brazil. For a long time, it has been a
cultural symbol and solid food for the Brazilian low-income families (Muniz-Miret, Vamos,
Hiraoka, Montagnini & Mendelsohn, 1996). Acai berry is in a critical crop in Brazil where is
grew in large scale. In the past, Brazilian Acai berry had little popularity with low demand and
therefore relatively small markets. Recently, however, especially after Oprah interview, there is
a sharp rise in the prices of acai berry (Brasileiro, 2009). This perhaps is following the
understanding that the kernel has high nutritious value. This exercise, therefore, attempts to
understand the economic logic behind the sharp rise in the prices of acai berries in the recent
past. The study will further look into possible measures that can be placed to prevent the hiking
price of this plant commodity…..

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