In this article, it talks about how India will benefit from the increase scarcity of cotton around the globe due to low planting rates in the leading producing countries. With the US decreasing in growing rate, India will expect to see an increase of sales to China and South East-Asia nations in 2008. Also, prices of cotton are excepted to rise; it is predicted to go as high as a dollar per lb. In the new crop season, India is estimated to produce 31 million bales of cotton. In addition, exports of cotton would likely increase by 20%, during the next season. With such large demand, cotton prices will remain very high. Countries include China, Indonesia, Thailand, Bangladesh and Pakistan are all going to be main buyers of the cottons.
We can see that there is "an insufficient amount or supply" of cotton produced. In economic terms, "an insufficient amount or supply" is defined as scarcity. As the amount of cotton becomes insufficient and the demand for it is increasing, it is inevitable that the price will increase as there is a limited amount of supply. The supply will become even more limited if any catastrophic events were to happen during the next crop season to disturb the growth. As a result, the production-possibilities curve will be changed and not as much cotton will be produced. Leading the resource to become even more scares. With the increasing scarcity, the profit made by the seller will increase significantly due to high demand and low supply. Without a doubt, resources becoming scares is a positive effect for the seller, but not so much for the buyers. With the increase in price, many companies have to change or make new plans due to the increase in price, as the opportunity cost of it will change.
