Summary:
With the objective of evaluating the impact of agricultural products in the markets of Cienfuegos, forced by the importance that these have when it comes to human subsistence, we present in this work information about this sector from a microeconomic approach.
In it, the theoretical background of the market is explained, taking the supply and demand of goods as a point of reference and engine of all economic activity. The sector is characterized and some world trends are mentioned as well as the Cuban case in particular. We offer economic information analyzed as data that can contribute to improving the operation of these markets and consequently raising the standard of living of society. The validation followed to obtain results that allowed knowing the reality of Cuban agriculture, was done through the consultation of documents and models that refer to methodological considerations. Thus,In carrying out this work, we intend to analyze to what extent each of the products that are marketed satisfies or not the demands of the consumer and we analyze the factors that slow down performance through the analysis of the sensitivity of demand.
Abstract:
With the objective of evaluating the incidence of the agricultural products in the markets of Cienfuegos, forced by the importance that these they have when of human subsistence it is, we capture in this work information on this sector from a micro-economic focus.
In the same one the theoretical antecedents of the market are explained taking as reference point and motor of the whole economic activity of this the offer and the demand of goods.
The sector is characterized and some world tendencies are mentioned as well as the Cuban case in short. We offer economic information analyzed as data that can contribute to the improvement of the operation of these markets and consequently the elevation of the level of life of the society.
The followed validation to obtain results that they allowed to know the reality of the Cuban agriculture, it was made through the consultation of documents and models that refer in the methodological considerations.
For it, when carrying out this work we seek to analyze in what measure each one of the products that you / they are marketed satisfies or not the consumer's demands and we analyze the factors that brake the acting through the analysis of the sensibility of the demand.
Introduction
Since today society is in a constant search for what and how much to consume taking into account income, companies are not left out of this movement, since in the end they are the main suppliers of everything that is produced and that in the end it is put on the market, therefore, the market that was previously a simple point of exchange, today goes on to refer to what is an essential mechanism of economic activity and in the regulatory space of production in the current conditions of globalization and internationalization of production.
Taking as a point of reference what society is and its difficulties in what is the current globalized era, taking into account the conditions in which third world countries find themselves and the real conditions of Cuba, we present this work with the general objective to evaluate the behavior of the demand for food goods in the Cienfuegos region and its impact on consumer income and local development, always trying to combine the rigor of the exhibition with the understanding of the topics addressed, gathering and projecting widely the theoretical and practical concepts of microeconomics, making use of the calculation of price, income and cross elasticities, thus basing the behavior of the factors with the statistical and economic information available.
Therefore, to achieve what we really want with this work, we set the following specific objectives:
1.-Argue theoretically the market concepts from the microeconomic point of view, 2.-Characterize the agricultural market today, 3.-Characterize the agricultural sector today, 4.-Evaluate the behavior of food products in the face of changes in demand for them with the use of elasticities in the agricultural market of the Cienfuegos region.
When referring to what the content of the work is, it is structured in three chapters dedicated to studying what is the behavior of the acquisition of basic goods and the sensitivity of these to changes in the factors that determine supply and demand in agriculture Cuban. More specifically, what is the first chapter investigates what the market is in its different manifestations and its classification according to the competition that exists in it, theoretically exposing what is supply and demand, emphasizing (with tables and graphs) the factors that can cause displacements or movements in the supply and demand curves, concluding with the externalization of the different types of elasticities of demand and what is a market in equilibrium.
Speaking more about the agricultural sector, we offer you in the second chapter information that refers firstly to what is the sectoral delimitation of agri-food activities, the main trends in the market for these goods, the organization of the sector as well as some aspects related to what It is the competition in the sector.
To finish this work, in this last chapter, we highlight what is the reality of Cuban agriculture, thus, we took a turn in the emergence and how the Cuban agricultural market was organized, we touched the rules that govern it, the main actors as well as the products that can be traded in it and culminating the work with the microeconomic analysis or calculation of the elasticities (price, income and cross) for the most important products in the agricultural market and finally exposing the summary of the analysis of elasticities.
Methodology used and materials used
The use of geometric procedures (graphs and tables) allowed to represent and understand in a simple way the relationships between the variables, the calculation of the variables was carried out through the Elasticities that allowed to analyze the sensitivity of the demand, with respect to the price variations, with respect to the consumer's income, and with respect to the price of other goods (substitute goods and complementary goods)
Methodological considerations: to provide more information about how this work was carried out, we put below the procedures followed in the data analysis and the most used criteria: the data analysis process begins in the last quarter of the year 2000 and is It closes in December 2002, so the updates and modifications that respond to the appearance of new data from dates after the publication of this work were pending until the completion of new research works for the next few years; For a more detailed analysis of the information by the consumer and given the plurality of information obtained for the same purpose, the transformation of quintals (QQ) to kilograms (Kg.) prevailed.
Statistical sources used: Model 0335.- Sales in the agricultural market of Cienfuegos, October-December 2000, 2001 and 2002; Provincial Directorate of Statistics; Model 0335.- Price index; Provincial Directorate of Statistics; Cash plan model.- Provincial Directorate of Economic Planning, Statistical Yearbook of Cuba for the year 2000: chapter 2; table 2.10. Population residing in the province, Circular letters and resolutions.- Provincial Directorate of Commerce, Gastronomy and Services.
Experimental part
To study the demand of the agricultural market, we first start from a compilation of information from the National Statistical Information Model (model 0335-00) on the control of agricultural market sales, in which the quantities sold in quintals (converted later to Kg.) with its respective value (in thousands of pesos), in addition to the description of the products. These data were taken for the period from the last quarter / 2000 to December / 2002. Then all this was processed in an electronic tabulator to achieve its best organization, creating an initial model conformed by the above, in this way it was calculated the average price of each of the lines,and then proceed to the sensitivity analysis (the calculations of the elasticities as reflected in (Annexes I, J and K), and that are found in the work. Here we only show the summary of the results of the elasticities.
Results and Discussion
In the analysis of the price elasticity of demand, we have considered examining a selected group of products, considering those that in our opinion are more significant, those that, due to their level of sales and their importance in the consumption of the population, exceed the rest. The analysis has followed the quarterly information and the levels of demand (quantity sold) are correlated with the price levels, comparing the values obtained quarter by quarter.
The price elasticity of demand provides information on whether or not it is convenient to proceed with a price modification, due to the effect it may have on demand and, consequently, on the income that sales will provide, depending on the shift in demand. The claim can present an elastic, inelastic, perfectly elastic, and perfectly inelastic claim.
The price elasticity of demand is a coefficient that allows to measure the relative sensitivity of the quantity consumed of an item to changes in its price, this coefficient will measure the movements along the curve. Since the demand curve slopes downward, changes in price and quantity are in the opposite direction, hence the price elasticity is negative. If the price elasticity is positive, we are in the presence of Giffen goods
(See table No 1)
Table No 1
The income or income elasticity of demand informs us about the role of a good or group of goods in the income of the population, but also about how demand can bring price adjustments according to the income levels of the applicants. This is significant, above all, in terms of the projection of the government's economic policy, especially in terms of fiscal expansion or contraction and in terms of the money supply.
For this analysis, the income of the population in the province since the last quarter of 2000 was taken into account according to the Plan Caja Model of the Provincial Directorate of Economic Planning and from here we calculate the average income for each quarter (See Annex H))
Being the goods of the agricultural market those whose natural destination is the satisfaction of food needs (classified in the order of needs as primary), within them, few basic goods appear, many as luxury goods and others as inferior goods. The presence of a high amount of the main goods that are marketed in the agricultural market, such as luxury goods, is a symptom that expresses the distortion, which in that market present the economic relations that should be natural, while the common logic he is alarmed by this behavior in goods that satisfy primary needs. The behavior observed here again shows us the fact that the burden that food goods represent in the budget for personal consumption is high,since the presence of a discrete increase in income means that if the demand for agricultural market products changes, most likely, due to the possibility of acquiring other food goods that may be substitutes for those sold in the target market analysis. Here the presence of invisible links that are established between the different markets begins to become evident, even when, due to the official treatment that can be given, from the point of view of the economic mechanism of the management of society, these markets are dissociated each other.due to the possibility of acquiring other food goods that may be substitutes for those that are marketed in the market under analysis. Here the presence of invisible links that are established between the different markets begins to become evident, even when, due to the official treatment that can be given, from the point of view of the economic mechanism of the management of society, these markets are dissociated each other.due to the possibility of acquiring other food goods that may be substitutes for those that are marketed in the market under analysis. Here the presence of invisible links that are established between the different markets begins to become evident, even when, due to the official treatment that can be given, from the point of view of the economic mechanism of the management of society, these markets are dissociated each other.
Table No 2
The cross elasticity of demand tells us how changes in the prices of other related goods affect the behavior of demand for a good. In the analysis, it is necessary to consider not only the numbers offered by the calculations about the correlation of goods, based on dietary precepts, but also the customs and common culture that predominates in society. When the values of the cross elasticity are positive numbers, the goods are substitutes, and the negative values refer to complementary goods. The value zero means that there are no correlating links to the goods examined.
Table No 3
Conclusions
The behavior of some goods such as luxury goods, as well as the presence of phenomena such as Giffen goods and negative values in income elasticity are an expression, as a whole, of the immaturity that still characterizes this almost recently emerged market relationship, but it also shows the effect of irregularities in other areas of the market on society. Although they do not constitute provisions that are officially regulated for the agricultural market -such as the sale at a price level that doubles the cost as is the case of the market in freely convertible currency, or as the exchange of currencies at a level that is more than 20 times higher than the official exchange rate or the “differentiated” prices of the “released sales”, and others-,they do affect the behavior of the categories and its variables such as prices and quantities offered.
In reality they are an expression of distortions in the market, one is in the presence of these when the decrease in its price corresponds to the decrease in its demand, a case that has its explanation in that the monetary income that was previously destined for its acquisition, is now shared with the purchase of another good.
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