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Price Mechanism: Worst frost in decades decimated French wine harvest

 Supply and demand in action here with news that exceptional frosts in France have caused significant damage to French wine-growers.

Already hit hard from the effects of the pandemic and by the imposition of tariffs on their wine exports by the United States (under Trump),severe frost is expected to have severely cut the grape harvest year.

Frosts will cause an inward shift of market supply and drive prices higher assuming that stocks from previous grape harvests are unable to make up the difference.

Farmers lit thousands of fires in their vineyards in an attempt to stop vines from freezing which has also created significant smog around Lyon - an example of a negative externality (creating external costs) something that the ultimate buyer of the wine isn't likely to have to take into account even if the market prices of their favourite wines will rise in the weeks and months ahead.

The supply of kiwis, apples, stone fruits has also been damaged by these freezing temperatures.

More here from BBC News

And this article from the Financial Times: Late frost to wreak havoc on French wine production




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