<p>Some of the wording of your question makes it hard to understand. </p>

<p>If the supply of soy in the world increased, we represent this as a rightward shift in supply. This lowers the world price, and increases the quantity supplied in the world. (If Africa represents a noticeable increase in world supply.)</p>

<p>However, note that if the <em>supply</em> did not increase, but the <em>quantity supplied</em> did increase, this represents a movement along the curves, and no shifts. In this case, we may have a surplus of soy goods, with no price change. </p>

CC BY-SA 4.0
2019-03-26T19:10:38.037Z
I'm talking about if it's possible to calculate a figure, an actual proportion % estimate of how much it would decrease
Pablo
CC BY-SA 4.0
2019-03-26T16:09:32.283Z
2019-03-26T16:09:32.283Z
user43395
<p><a href="https://www.aeaweb.org/articles?id=10.1257/aer.103.6.2265" rel="nofollow noreferrer">Roberts and Schlenker (2013)</a> estimate the price elasticity of demand for agricultural commodities to be about -0.08 to -0.05. These are elasticities estimated over much smaller changes in <span class="math-container">$p$</span> and <span class="math-container">$q$</span> than you are suggesting. Remember that the elasticity is effectively percent change in <span class="math-container">$q$</span> for a percent change in <span class="math-container">$p$</span>, so we can ask what the percent change in <span class="math-container">$p$</span> is for a percent change in <span class="math-container">$q$</span>. </p>

<p>If production is 15x more soy than there is currently (in total, so globally) then this is a 1500% ((1*15+1 - 1)/1) increase in soy. Using the high end (most elastic), we get that prices have to fall 18,750% (15/-0.08) to clear the market at this new higher quantity. This is impossible, so this tells us that our local elasticity measures won't do to solve this problem. It also suggests that there would be no reason to add so much soy bean production, because demand is likely unable to handle so much soy. </p>

CC BY-SA 4.0
2019-08-23T18:18:02.643Z
How much prices could drop to be reasonable to keep adding soy to the market? Near the cost of production?
Pablo
CC BY-SA 4.0
2019-08-23T19:50:52.383Z
@Pablo There's always opportunity cost. Yes, you can make money selling soybeans at slightly above production cost, but you're losing out on money you could have made by growing something more profitable.
Nuclear Hoagie
CC BY-SA 4.0
2019-08-23T18:00:56.760Z
2019-08-23T19:45:23.403Z
2019-08-23T19:45:23.403Z
BKay
<p>Soy is a commodity and the main export of Argentina. It is said Argentina has 40 million of hectares of arable land and it produces food for 400 million persons and that potentially could make food for 600 millions. I can't confirm this is true but it's said by the president of one of the main agrarian organizations of Argentina, probably with statistics made by them and/or data of the national institute of agrarian technology.</p>

<p>Africa it's said to have 600 million hectares of arable land, which is 15 times the arable land of Argentina. What would happen to the prices of soy related commodities if Africa proportionally introduces 15 times more soy related products to the world? Take any soy product you want for the answer, soy bean if you want for example. Can this be calculated? I've heard of prices simulations predictions for other commodities when introduced or retrieved from the market, such as oil, so I suppose this can be calculated.</p>

CC BY-SA 4.0
2019-08-23T17:32:33.683Z
Are you asking about 15x more soy than there is currently (in total, so globally) or adding 15x more than is currently produced in Argentina? Argentina produces about 17% of global soy, so the difference is between a 255% ((.17*15+1 - 1)/1) increase and a 1500% ((1*15+1 - 1)/1) increase in soy.
BKay
<supply-and-demand><price><commodities>
What impact would introducing 15 times more soy worldwide do to the price of soy?
Pablo
# What impact would introducing 15 times more soy worldwide do to the price of soy?

(Asked by: username_0 on 2019-03-26)

Soy is a commodity and the main export of Argentina. It is said Argentina has 40 million of hectares of arable land and it produces food for 400 million persons and that potentially could make food for 600 millions. I can't confirm this is true but it's said by the president of one of the main agrarian organizations of Argentina, probably with statistics made by them and/or data of the national institute of agrarian technology.

Africa it's said to have 600 million hectares of arable land, which is 15 times the arable land of Argentina. What would happen to the prices of soy related commodities if Africa proportionally introduces 15 times more soy related products to the world? Take any soy product you want for the answer, soy bean if you want for example. Can this be calculated? I've heard of prices simulations predictions for other commodities when introduced or retrieved from the market, such as oil, so I suppose this can be calculated.

**Tags:** supply-and-demand, price, commodities
> **Comments:**
> **username_1**: Are you asking about 15x more soy than there is currently (in total, so globally) or adding 15x more than is currently produced in Argentina? Argentina produces about 17% of global soy, so the difference is between a 255% ((.17*15+1 - 1)/1) increase and a 1500% ((1*15+1 - 1)/1) increase in soy.  

---

## 2 answers

### Answer by username_1 on 2019-08-23. Score: 2 | Accepted answer

[Roberts and Schlenker (2013)](https://www.aeaweb.org/articles?id=10.1257/aer.103.6.2265) estimate the price elasticity of demand for agricultural commodities to be about -0.08 to -0.05. These are elasticities estimated over much smaller changes in $p$ and $q$ than you are suggesting. Remember that the elasticity is effectively percent change in $q$ for a percent change in $p$, so we can ask what the percent change in $p$ is for a percent change in $q$.

If production is 15x more soy than there is currently (in total, so globally) then this is a 1500% ((1\*15+1 - 1)/1) increase in soy. Using the high end (most elastic), we get that prices have to fall 18,750% (15/-0.08) to clear the market at this new higher quantity. This is impossible, so this tells us that our local elasticity measures won't do to solve this problem. It also suggests that there would be no reason to add so much soy bean production, because demand is likely unable to handle so much soy.

> **Comments:**
> **username_0**: How much prices could drop to be reasonable to keep adding soy to the market? Near the cost of production?  
> **username_3**: @Pablo There's always opportunity cost. Yes, you can make money selling soybeans at slightly above production cost, but you're losing out on money you could have made by growing something more profitable.  

---

### Answer by username_2 on 2019-03-26. Score: 0

Some of the wording of your question makes it hard to understand.

If the supply of soy in the world increased, we represent this as a rightward shift in supply. This lowers the world price, and increases the quantity supplied in the world. (If Africa represents a noticeable increase in world supply.)

However, note that if the *supply* did not increase, but the *quantity supplied* did increase, this represents a movement along the curves, and no shifts. In this case, we may have a surplus of soy goods, with no price change.

> **Comments:**
> **username_0**: I'm talking about if it's possible to calculate a figure, an actual proportion % estimate of how much it would decrease  

---

