Annex I


Figure A-10: Food production in relation to consumer and producer prices

 price requirements

 demand production/supply at cp
 (at cp)






 Sc production/supply at pp
 cp --- -------------------- --- ---
 Marketing margin
 pp --- -------- -- ----- -- ^ _
 > volume



Fig. A-11: Impact of improved marketing performance on food supply and demand


 price requirements


 demand
 old production new production
 /supply at cp /supply at cp




 N^ >/ / production/supply at pp
 oldcp ---------------------- -
 newcp ....... --- -----
 newCp ..................... ... ..........
 old pp ------------------- --- -------
 >,, volume


The effects of improved marketing performance on the volumes of food supply and demand
and on the structure of food deficits are obvious: a result of a lower consumer price, demand
increases from v to v' while, due to the higher producer price, supply increases from v to v'as
well. At v' we get a the new market equilibrium, and both the supply and demand deficit are
reduced from v to v', hence overall food security improves.

The effects of the contrary case of worsening marketing performance can easily be deduced.

6. The combined impact on the food economy and on food security

Having analysed the structure of food deficits and the impact of economic factors
determining food demand and supply we are in a position to draw some general conclusions


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