The United States of America presently produces nearly half of the world's soybeans. Soybean crop provides the world with the most protein and oil of any crop. It comes from a bushy green plant considered a legume related to peas, clovers, and alfalfa. Soybeans are to be planted in late spring and produce about 60 to 80 pods. Each pod contains three beans. In early fall, the crops are harvested. Since September 2001, there have been two major events that have had substantial impact on the market demand and market supply for soybeans. .
The first major event that had a significant impact on the soybean market was China's ban on GMOs, genetically made organisms. In late October, Beijing blocked America's biggest overseas market for soybeans to protect China's farmers who cannot match low US prices. The US saw these efforts as a warning signal for a change in China's foreign policy. If China were to ban the importation of soybeans, it would decrease US exports, weakening the economy. GMOs, genetically modified organisms make up nearly 2/3 of soybeans. Politicians in foreign countries have campaigned to the public, instilling fear in their US imported GMOs. In mid January, China passed what the United States had been fearing; a ban on the importation of GMOs. This ban was to take affect on March 20. GMOs, genetically modified organisms, have now become an issue of concern. The ban has potential to, "hamper US soybean sales as 70 percent of US soybeans are grown from genetically modified seed" (Guzman, 2). Foreigners concern for crops planted with GMO seeds has resulted in a large decrease of demand for such products. This change in foreign policy results in a decrease in the number of consumers which causes the demand curve to shift left as shown below:.
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The demand curve shifts leftward, decreasing from D1 to D2, equilibrium price decreases from P1 to P2 and equilibrium quantity decreases from Q1 to Q2.
