Wednesday, March 3, 2010
Tomato Shortage Hits Restaurants
This article describes all of the supply and demand problems we have come to expect from a supply shortage due to natural weather causes. However, it is also relevant to us because it describes how some restaurants, such as Wendy's, are only putting tomatoes on sandwiches when customers request them rather than having their presence be assumed.
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I was just at the Wendy's and experienced first hand the shortage of tomatoes. This is something that we often overlook however the severe climate that recently swept the country has affected many markets including the labor market and now the market for tomatoes. It is funny how we see examples of basic economic theory in our everyday lives.
The article says that most of the Florida tomato industry is produced by about 100 farming operations that is spread across 40,000 acres of land. It is impressive that these vegetable producers are able to satisfy 70% of US demand, but it also showcases what can happen when the supply comes from such a small area. One thing I found interesting is that it mentions that grocery stores are subsidizing the extra cost of tomatoes during the shortage, but the other day at Meijer I purchased 4 tomatoes for $5...
I was at the store the other day and thought to myself that the prices of tomatoes were expensive and this explains why. This is why it is risky to put all your tomatoes in one basket as they say.
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