Trend for cotton stems in floral bouquets puts spring in farmers'

steps

ABC Rural / By Lucy Cooper; Posted Wed 21 Jul 2021

https://www.abc.net.au/news/2021-07-21/cotton-florist-trend-boon-for-farmers/100298194

A growing trend to use cotton stems in floral arrangements is providing new income

streams for farmers as millennials seek to curate more "natural" looking homes.

Toowoomba florist Cherie Zimmerle said the popularity of the stems which can cost up to

$20 each had grown alongside the dried flower trend, which was behind a boom in the

Australian native flower industry.

[...] Ms Zimmerle said what was once considered a hipster trend is now seeing everyday

Australians purchasing cotton for in-home decoration.

While most Australians would only be exposed to cotton after it has been processed into

clothes or linens, the growing appreciation for the raw product is providing new

opportunities for farmers.

[...] By comparison, the price of a cotton bale in the past harvest season was, on average,

$580 a bale - equating to a crop value of about $6,960 a hectare.

If those stems were instead sold in a florist, the approximate value would be $20,000 a

hectare.

In Melbourne, a bunch of cotton with three stems could set you back $55, while in Sydney

an arrangement of cotton and eucalyptus will cost $88, with a standard bunch of dried

cotton setting you back $45.

For those who cannot afford the real stuff, retailers have picked up on the trend and now

sell artificial versions across the country.

a) Draw and explain the impact of the new trend on the demand for cotton stems.

b) What do you predict the Price Elasticity of Demand for cotton stems would be like,

and why?

c) What do you predict the Income Elasticity of Demand for cotton stems would be

like? Would they be a normal or inferior good? Explain.

d) The article mentions that artificial versions have only recently gone on sale. All else

constant, explain how the introduction of this product would likely impact the

demand of real cotton stems.

e) Would the Cross-Price Elasticity of Demand between real cotton stems and artificial

cotton stems be positive or negative? Do you think it would be high or low?