RMIT VIETNAM

PRICES AND MARKETS

SEMESTER 3-2022

Assessment Task 1: Market Equilibrium Analysis

Course Code ECON1194

Student ID s3929490
Campus SGS
Student Name Tran Thi Ngoc Linh
Lecturer Bao VT
Assignment due date 11th November 2022
Words 398 words

Case Study 1: Tofu & Bean Curd Production in China

1. Analysis the Key Drivers

Recently, as a result of decreased production in Argentina and increasing production in

Brazil, the worldwide supply of soybeans is decreasing, keeping the price of soybeans high,
reaching a record high of 3,792 yuan ($596.22) per tonne (Dương H 2022).
China has maintained a stringent GM-free policy for items designated for direct human
consumption based on customer desire, which helps ensure GM-free soybeans, green the
industry, enhance the production and inventory management system (Nepstad 2021). Thanks
to the improvement of technology, there has been a rightward shift in the supply curve, such
that more production could be supplied by the producer at any given price. Large
manufacturers have conducted tests on raw materials in order to guarantee both their high
quality and their lack of danger.
2. Evaluate the change in Demand and Supply

a. Change in Demand

Since the COVID-19 epidemic has shaken people's faith in meat, it's potential that soybeans
get more attention as alternatives (Kerry 2020). So the tofu and curd bean production revenue
in the 2021-2026 period is increasing more than the 2016-2021 period. Therefore, China has
become a vital target for plant-based industries. It is anticipated that this industry will be
worth almost $12 billion by 2023 (Figlobal n.d). Consumers' shifting diets have resulted in a
dramatic uptick in the market for soy-based alternatives such tofu and bean curd.

b. Change in Supply

Soybeans supply is notoriously unstable, in contrast to the stability of demand. Soybean

imports have recently decreased and increasing demand has driven up the raw material prices
that could influence the supply of China market in 2022 (SPGlobal 2022). However,
investment in manufacturing equipment in China's Tofu and Bean Curd Production business
is on the rise due to the industry's ongoing efforts to modernize its production lines which
helps supply more products to the market.

3. Discussion

Supply and demand are both on the rise and shift the curve to the right, but demand is
growing in importance at a rapid rate. To increase domestic production and prevent future
bean shortages, the China Government will develop land exclusively for soy, boost soybean-
corn rotation programs, and concentrate on soy productivity (Reidy 2022).

When happening the shortage market in the near future, the price is creasing from 𝑃0 to 𝑃1
and also changing the position of quantity 𝑄0 to 𝑄1 and new equillibrium 𝐸1 is create. When
there is a change in either demand or supply, the equilibrium price and quantity of a product
are affected (Taylor. et al. 2017).
 Price
𝐷1
𝑆0 Shortage Part
𝑆1
𝐷0

𝑷𝟏 𝐸1

𝐸0
B A
𝑷𝟎

𝑸𝟎 𝑸𝒔𝟏 𝑸𝟏 𝑸𝑫𝟏
Quantity

REFERENCE LIST:
Duong H (2022) Trung Quốc có thể cắt giảm nhu cầu đậu tương tới 30 triệu tấn,
Nongnghiep.vn, accessed 9 November 2022, < https://nongnghiep.vn/trung-quoc-co-the-cat-
giam-nhu-cau-dau-tuong-toi-30-trieu-tan-d315948.html>.

Figlobal (n.d.) Plant-Based Market in China, Figlobal, accessed 9 November 2022, <
https://www.figlobal.com/china/en/visit/news-and-updates/plant-based-market-china.html>.

Li M (2022) Soybean meal prices in China hit record high amid tight supply, S&P Global,
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Nepstad I (2021) The history and future of sustainable soy in China | China Dialogue, China
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of-sustainable-soy-in-china/>.
Reidy S (2022) China plans to produce 40% more soybeans in five years, World-Grain.com,
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produce-40-more-soybeans-in-five-years>.

Rodrigues M (2020) The history and future of sustainable soy in China | China Dialogue,
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Taylor, T. et al. (2017) Principles of Economics, 2e edition, Minneapolis Open Textbook

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