Question

Rotting teeth and fatty organs turn Australians sour on sugar

Consumption has been flat-lining, and appetite for the sweet stuff probably won't grow much at all in the medium term as people shift to low sugar, diet and sugar- free options, said Mr Charles Clack, a Rabobank analyst in Sydney.

Some state governments have been trying to discourage consumption by displaying graphic images of rotting teeth and fatty organs on buses and billboards.

"Health is a large factor behind this trend, offsetting the positive influence of stable domestic population growth," said Mr Clack.

Australia isn't the only place where people appear to be wary of over-indulging in sugar. Demand in the European Union has hardly changed in recent years, and several countries have imposed taxes on sugar consumption, including Britain and South Africa.

Taking up the slack is Asia, eating and drinking more of the sweetener than ever before.

Since the region accounts for over 40 per cent of the world's sugar consumption, global demand has been climbing steadily, expanding 15 per cent in the past decade, according to the US Department of Agriculture.

Not only has Asian usage been rising, but it also has more room to grow, with populations expanding and per capita consumption low in some countries.

In Australia, people consumed 10.8kg per person of sugar and sweeteners in 2018, while consumption in North America was 11.5kg, according to Euromonitor data. In China, people ate or drank just 5.5kg per person, and in India it was 8.9kg.

Health issues "are not exclusive to Australia but, with lower per capita consumption, there is a less pressing agenda in India and China to address sugar over-consumption", said Mr Clack.

Given the lower sugar ingestion, health concerns are less prevalent, he said. He expects both those Asian nations to show signs of increasing sugar consumption through this year.

MODERATION IMPORTANT

Demand in some Asian nations is considerably higher than developed countries.

In Malaysia, one of the top users in the Asia-Pacific with consumption of 31.5kg per person of sugar and sweeteners last year, the country's top producer of refined sugar says it is unfair to just blame sugar for diseases.

"I disagree... that only sugar causes diabetes. It's about the way of life: how you manage your diet, exercising, taking things in moderation," said Mr Khairil Anuar Aziz, executive director of MSM Malaysia Holdings.

"Some people may not like it when I say this because I'm in the sugar business, but logically we as human beings need sugar as well, and moderation with a balanced lifestyle is very important," he said in an interview.

CHINA MARKET

MSM is hoping to tap rising demand in China, and is in the final stages of discussions to set up partnerships in the nation's downstream industry. It also wants to sell sugar for popular snacks such as bubble tea and for health drinks.

Rising demand may help bring relief to farmers.

The global market could swing to a 4.3 million metric tonne deficit in 2019-20 from this year's 1.1 million tonne surplus, Rabobank said in March. Futures in New York are broadly flat in 2019 after plunging about 40 per cent in the past two years.

Still, things aren't likely to change much in Australia.

For Mr Daniel Jackson, 40, who started food supply business Artisan Foods seven years ago with two small delivery trucks in Perth, Western Australia, the change in sentiment has been a boon. He has moved to a warehouse five times the size and doubled his fleet as demand for alternative products booms.

He sells 100kg a week of coconut sugar, a substitute for the mainstream version, and about 2,000 cartons of sugar-free kombucha drinks, from nothing two years ago.

"I never intended to build a health food product business, but that's where it's ended up," he said.

Please read the article attached and answer the questions(WITH DIAGRAMS):

1. “Rising demand may help bring relief to farmers”. Using the concept of price elasticity of demand, explain and illustrate how this change will affect the farmers total revenue.

2. The article mentioned that “..... several countries have imposed taxes on sugar consumption, including Britain and South Africa”. Explain and illustrate using economic theory and model, how this will affect the efficiency of the sugar market. In your answer, you need to also clearly explain on how the tax will be shared between buyers and sellers.

Answer 1