Nut prices are hitting rock bottom as global

demand remains low

What happens when you’ve got too many nuts, and not enough 
people to sell them too? Easy… you lower the price! That’s the 
price mechanism in a nutshell… 

This is exactly what is happening in the US nut market. Since the 

beginning of the year, the global spread of Covid-19 has had a 
devastating effect on the ​demand​ for nuts, as bulk buyers such as 
airlines, hotels, and restaurants have cancelled massive orders 
and new ​demand​ has completely dried up. 

Alongside the fall in ​demand​ many nut producers in the US have 

also experienced a particularly large harvest this year, the 
combination of which has resulted in a huge oversupply. 
Nut suppliers are therefore being forced to dramatically lower 
their prices in order to try and sell-off their large surpluses. The 
US almond industry for example, accounting for 80% of global 
production, has seen a 38% reduction in price since January this 
year. 

Whilst nut producers are confident that they will be able to sell-off 
their supplies, the decline in price will have a significant effect on 
the revenues within the industry this year. 

Answer the following questions. 

Q1. What is meant by the term ​supply​? 

Q2. Explain why the ​demand​ for nuts has decreased so 
significantly. 

Q3. Draw a diagram to show the impact of Covid-19 on the market 

for nuts in the US. 

Q4. Explain the relationship between price and r​ evenue​.