Thursday, November 14, 2013

Case Study in Supply and Demand: Cows, Bees, and the Soaring Price of Almonds

Almond prices are soaring. As the following chart shows, some varieties are selling for double the price of five years ago, others for three times more. What is driving the upward price trend? Supply and demand is the easy answer. Behind the supply and demand curves lies a more complex story of nuts, cows, and bees.

Cows are out, nuts are in

One of the factors behind the increase in almond prices is a shift in tastes toward foods that consumers perceive as healthier. Milk from cows is out. U.S. consumption of cow’s milk, which consumers associate with artery-clogging cholesterol, has fallen more than third since the 1970s. It is a generational thing. According to an analysis of government data by, each population cohort drinks less milk than the one before. In the late 1970s, Americans of all ages drank, on average, about one glass of milk a day. Thirty years later that was down to about two-thirds of a glass. And it is not just adults who are giving up on cow’s milk. Over the same period, children aged 2 to 12 years cut their daily milk intake from 1.7 glasses to 1.2. >>>Read more

Follow this link to view or download a classroom-ready slideshow that applies supply and demand theory to the market for almonds.

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