University of Economics

Ho Chi Minh City

ASSIGNMENT
SUBJECT: MICROECONOMICS
TOPIC: GOOD NEWS IN AGRICULTURE IS BAD
NEWS FOR VIETNAMESE FARMERS

Lecturer: Nguyen Huu Loc

Course code: 23D1ECO50100174
Class: TS0002
Student: Nguyen Ngoc Diem My
Student code: 31231023570

Ho Chi Minh City, November 4rd, 2023

 Table Of Contents

Table Of Contents______________________________________________________

A. Preface____________________________________________________________

B. Contents___________________________________________________________

1. Theoretical basis__________________________________________________

1.1. Demand_____________________________________________________

1.2. Supply______________________________________________________

1.3. Three steps to analyze changes in equilibrium_______________________

2. Introduction: Reasons Of Choosing the topic____________________________

3. Reality: Instability in the price of dragon fruits____________________________

4. Apply the supply and demand tools, the "three-step analysis of

equilibrium change" method, to interpret the given event.____________________

5. Providing recommendation to the suppliers with regard to increase

profit in the long term_________________________________________________

C. Reference_________________________________________________________

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 A. Preface

Microeconomics is the social science that studies the implications of incentives

and decisions, specifically how those affect the utilization and distribution of

resources. Microeconomics shows how and why different goods have different

values, how individuals and businesses conduct and benefit from efficient

production and exchange, and how individuals best coordinate and cooperate

with one another.

Under the topic of "good news for agriculture is not always good news for

farmers", I chose the event of unstable dragon fruit prices in recent years to

investigate the causes and propose solutions to increase profits for agriculture

producers in the long term.

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 B. Contents

1. Theoretical basis

1.1. Demand

a) Definition: Demand is an economic notion that refers to consumer's

desire to obtain products and services and their willingness to pay a

specific price.

b) Demand curve displacement:

- The change increases the amount of demand at each price level, and the

demand curve shifts to the right: there is an increase in demand.

- The change reduces the demand at each price level, and the demand curve

shifts to the left: there is a decrease in demand.

1.2. Supply

a) Definition: Supply is a critical economic concept representing the

overall amount of a product or service available to consumers.

b) Supply curve displacement:

- Any change that increases the supply at all price causes the supply curve

to move to the right.

- Any change that reduces the supply at all price causes the supply curve to

move to the left.

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1.3. Three steps to analyze changes in equilibrium

- Step 1: Decide whether the event shifts the supply

curve, the demand curve, or in some cases, both

curves.

- Step 2: Decide whether the curve shifts to the right or the left.

- Step 3: Use supply-and-demand diagram to

examine how the shift affects the equilibrium

price and quantity

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 2. Introduction: Reasons Of Choosing the topic

The phenomenon of " good season- lost price " in Vietnam's agriculture in

recent years has caused difficulties for farmers. So I chose the dragon fruit price

instability event to clarify the topic " Good news in agriculture is bad news for

Vietnamese farmers " . First, this paper will discuss the reality of the dragon

fruits' s market, focusing on its instability in price. Then, I will analyze the

situation using the supply and demand tools and the "three-step analysis of

equilibrium change" method. Finally, after clarifying the cause, practical

recommendations will be given to increase the profit in the long run.

3. Reality: Instability in the price of dragon fruits

Due to the impact of the COVID-19 epidemic, many provinces in the Mekong

Delta region are having difficulty finding outlets for fruits. Fruit trading

activities have been "frozen", this has led to price instability of a series of

fruits, causing difficulties for people's lives.

At this time, dragon fruit in Binh Thuan, Long An and Tien Giang provinces is

in reason but due to the impact of the COVID-19 epidemic, export is difficult

and only domestic consumption continues to decrease.

In Tien Giang and Long An provinces, red- fleshed dragon fruit costs only from

6,000 to 8,000 VND/kg, white- fleshed dragon fruit costs less than 5,000

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VND/kg, overripe, small and not-so- beautiful fruit costs only 1,000 - 3,000

VND/kg.
1

In Binh Thuan province - the " capital" of dragon fruit, this fruit's price has

"dropped" in the last 10 days. They are bought at the garden for 3,000 - 5,000

VND per kg. Worse, overripe fruit,… the purchase price is much lower. The

gardener said it is usually during the main season, traders often come to the

garden to negotiate prices. But in this case, buyers were few, and prices were

sold at a loss while the dragon fruit ripened red in the garden.

Over the past time, dragon fruit prices have fluctuated and become less stable.

People always face the situation of " good season - lost price " and the opposite.

At the beginning of 2021, dragon fruit recorded low prices equivalent to this

time, even lower in some places.

In Ho Chi Minh City, the price of dragon fruit is at 12,000 - 25,000 VND/kg. At

Hoc Mon market, the price of 15,000-18,000 VND/kg, Thi Nghe market 20,000
1 https://c2.staticflickr.com/4/3520/3807030676_b637c05799_z.jpg?zz=1

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- 25,000 VND/kg. The mobile carts sell small, less beautiful fruits, priced from

only 12,000 - 15,000 VND/kg.

4. Apply the supply and demand tools, the "three-step

analysis of equilibrium change" method, to interpret the
given event.

S1 S2

E1
P1
E2
P2

Q1 Q2 Quantity

As mentioned above, the demand is constant and the supply will shift to the

left since dragon fruits are exported in a huge amount to China but China has

been able to grow dragon fruit so cannot export them.

Initially, the equilibrium quantity is Q1, with P1 as the equilibrium price.

There, we have equilibrium E1. After that, when the supply of dragon fruit

grows, the supply curve shifts from S1 to S2 and D then meet at an intersection

which is equilibrium E2. Based on the graph above, it shows why the price of

dragon fruit has fallen dramatically.

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 5. Providing recommendation to the suppliers with regard to
increase profit in the long term

- Building and developing agricultural product trading models to connect

agricultural consumption, improve the quality of agricultural products,

and promote agriculture in international integration.

- There are policies to support credit and finance for businesses and

purchasing establishments that have difficulty contributing to solving

output problems for agriculture products. Concurrently, enhancing legal

value to ensure the rights of farmers.

- Expanding export markets: reducing domestic competition, developing

consumption markets and improving product value.

- Effective production planning, ensuring the appropriate number of dragon

fruits. At the same time, apply scientific advances to production.

- Promoting the product and building the brand helps it become known to

more people, demand and product value increase.

- Location authorities offer solutions and guidance for farmers in managing

production and providing adequate information about the agriculture

market. At the same time, farmers find out about the market that they do

business with to make appropriate production plans.

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 - It is essential to disseminate requirements for food safety and hygiene

based on the standards of both domestic and international market.

C. Reference

- https://voh.com.vn/thi-truong/gia-ca-thi-truong-hom-nay-21-6-2021-thanh-long-lai-rot-
gia-405391.html
- https://vtv.vn/kinh-te/nguyen-nhan-khien-thanh-long-viet-di-lui-
20231003234818603.htm
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