Shortages. This word has been one of the most frequently heard in recent years. The first time, in Spain, was with the outbreak of Covid, which led many people to rush to supermarkets to stock up on everything they could (especially toilet paper). But something similar has also happened with the war in Ukraine (fueled by the truckers' strike in protest against the rise in fuel prices). But why are there shortages? What causes people to go to supermarkets and buy more than they had planned during times of crisis like the ones we've described?
Today we are going to talk to you about this term, what it means, the causes for which it occurs and the effects that it can cause (and does cause), in addition to talking about some current examples of how a shortage is created.
What is shortage
According to the RAE, when we look for the definition of shortage, it tells us that it is:
Lack of certain products in a commercial establishment or in a population.
In general, we could say that a shortage occurs when products are unavailable in a store or a city. It doesn't have to involve multiple products; even a single product can be considered a shortage. This means there is more demand than supply; more people want that product than there are products available.
Normally, shortages disappear naturally because as demand is met, there is less to deal with, and eventually, sooner or later, it runs out. But sometimes, because the products are perishable or sell out quickly, shortages can last longer.
Shortages occur in all sectors, from food to clothing, health (drugs), electronic products and accessories, etc. And in addition, the fact that there is a shortage of a product can lead to more problems related to it. For example, if there is a shortage of flour, certain recipes cannot be made if this ingredient is not available; and those that could be made would inevitably rise in price.
Why is there a shortage?
There are many reasons why, at a given moment, a city, supermarket, pharmacy, etc. may experience a shortage. Although the factors that intervene and cause this situation are several:
- On one hand, price control. It may happen that it is the Government that sets a lower price than the market price, and that people want to buy at that price, thus exhausting the supply of those products.
- On the other hand, the increase in demand. In other words, the population suddenly demands a specific product, either because it has become fashionable, because it is mandatory or for other reasons (such as crises, pandemics, wars, etc.).
- Lastly, there could be a drop in supply. In other words, fewer quantities of a particular product are produced.
Consequences of shortage
It is clear that shortages not only cause a lack of products, but, as a consequence, more added problems appear that we often do not relate to this main one.
One of the most common is the black market. In other words, it's about having access to products that are unavailable, but at a higher cost. Face masks are a prime example. With demand exceeding supply, the black market emerged to sell them at exorbitant prices, resulting in a much higher price tag.
Another consequence of the shortages is rationing . The best example of this is the most recent initiative, that of sunflower oil. Now, when you go shopping at Mercadona, as well as other supermarkets, they warn you that only one five-liter container per person will be allowed. In this way, they ration their reserves to reach more people.
Finally, another problem caused by shortages is forced saving . Since there's no way to buy the good or service, people don't spend their money, so they're forced to save. However, this isn't really the case, as we return to the initial problem of the black market, meaning that this forced saving can actually turn into even greater spending because people end up paying more for the product.
How to solve the shortage
After knowing why there is a shortage, governments must fight to put an end to it in the shortest possible time. But not only the government; also the companies themselves, especially if they have been the ones that have caused this.
In general, as we mentioned before, shortages tend to disappear naturally. But in reality, this is because actions are taken to prevent the problem. For example, if a company suddenly cannot meet the demand for a particular product, it usually allocates more resources and personnel to cover that demand, increasing production.
In the case of medicines, consoles, video games, etc. this is done because it is the solution to avoid the problem. And the same in other sectors such as food, textiles, technology, etc.
Another action taken by the Government is to regulate the prices of these products so that everyone can afford them, or to limit the purchase of a certain number of items per family or per person (which would be called rationing), something that is usually applied in many supermarkets.
Stockout Examples
We are going to comment on two examples from recent years, with which it will surely be clear to you what shortages are and why they exist.
The first example involves toilet paper . When the coronavirus outbreak hit Spain, many people rushed to buy up all the toilet paper. Carts and carts of this "precious item" were filled to such an extent that when others wanted to buy some, they were surprised to find a shortage, as stocks were running out immediately. What happened? Well, production of this product was increased, and after a few weeks, there was enough for everyone (and even some left over).
Another example is sunflower oil . Due to the war in Ukraine, and given that it's the main producer of this oil, alarm bells rang and many people panic-bought it. But supermarkets quickly took action to ration their stocks, prohibiting the purchase of more than 5 liters per person. With the truckers' strike, many more products are currently out of stock, but, as in the first example, the shortages will eventually resolve themselves.
Has it already become clear to you the reason for the shortage and all that it implies?