June 2014 - Context 1 - Essay Model Answer:
The key here, as it always is, is to understand what the question is asking and then making sure that we answer it. An idea here would be to try to simplify the question, so that we really understand what it is asking us.
I think what is asking could be summed up with:
Should governments stop food from being used to produce biofuel.
The main starting point has to be the structure of the essay. Here the acronym DIC ED S P A C applies:
The obvious definition from the question is probably Government Intervention.
Government ...view middle of the document...
However, this means there are less crops available for the food market, causing a reduction in supply in that market, as shown in diagram 2: (Note that I would not normally encourage a candidate to draw more than one diagram for an essay question, but I feel it is necessary here)
As we can see from this diagram, the reduction in supply of crops to the food industry has caused the price of food to rise. This has caused, according to the extract (showing the examiner that I’ve read the extract and am keeping in mind the question) more than 30 million people to be dragged into poverty. This is one of the main reasons as to why governments should intervene to prevent agricultural products from being used to produce biofuel. (Directly quoting the question at the end of the paragraph lets me know that I’m still on track to answering the question and also lets the examiner know the same.)
Governments sometimes need to intervene in markets to correct market failure, where allocative inefficiency has occurred, where resources have not been allocated in the best possible way to maximise consumer welfare. Clearly, if people are unable to afford their basic needs, a market failure has occurred and this indicates strongly that government intervention needs to be implemented. (If you notice this is actually the ‘Solutions’ part of my DICEDSPAC plan, but I’ve not actually described any solutions, I’ve just explained the need for intervention. The reason for this is that the question has not asked me to evaluate solutions, it has asked me to evaluate whether or not intervention should occur. This means that I can use different types of intervention as an answer, but I’m not obliged to. It is more likely that I will do that later on when I’m discussing problems of intervention.)
The reason that the price of wheat and sugar have gone up is due to the rationing, signalling and incentive functions of the price mechanism. As the demand grew, the incentive for farmers was to produce biofuel products, which also rationed the amount of food available for consumers. The only way in which governments could override these functions is either to reduce the supply of foodstuffs to the biofuel market, or to increase the supply to the food markets. (Solutions)
Legislation would probably be the most effective way of reducing the supply to the biofuel market, but there are consequences to this. Those governments who oversee countries where the biofuel technology is being pioneered could see a reduction in employment opportunities in a growing industry, as well as increased costs in policing the new regulations. It is also unlikely that they are the countries that are most affected by the increase in food prices, so there would be little incentive for them to implement this legislation. (Problems)
The governments that are overseeing economies that are developing and are more likely to be reliant on the production of food would also face resistance of...