What is a 'Shortage'

A shortage is a situation in which demand for a good or service exceeds the available supply. Possible causes of a shortage include miscalculation of demand by a company producing a good or service, resulting in the inability to keep up with demand, or government policies such as price fixing or rationing. Natural disasters that devastate the physical landscape of a region can also cause shortages of such essential products as food and housing, also leading to higher prices of those goods.

BREAKING DOWN 'Shortage'

Government-imposed price ceilings can create shortages when they don't allow the free market to dictate the price of a commodity or service based on supply/demand. When this happens, an artificially high number of people may decide to purchase that item because of the low price. For example, if the government provides free doctor visits as part of a national health care plan, consumers may experience a shortage of doctor services. This is because people are more likely to visit a doctor when they no longer have to pay directly for the cost. Global consumer and business trends can also create commodities and labor shortages.

Cocoa Shortage

As of 2016, chocolate makers face a shortage of cocoa beans because of falling supplies of the raw commodity and increased demand for chocolate. In 2015, global demand for chocolate increased by 0.6% and rose to 7.1 million tons. However, production of cocoa from leading cocoa bean suppliers in areas such as Ghana and the Ivory Coast fell by 3.9%, and global supply of cocoa beans was just 4.1 million tons. A factor in the increased demand is that consumption of chocolate candy is on the rise in China and India. Overall, the demand for cocoa in Asia jumped by 5.9% in 2015. As a result, the price of cocoa in 2015 rose to over $3,000 per metric ton, the highest level since 2012. To reverse the cocoa shortage, leading chocolate producers such as Nestle S.A., are partnering to educate West African cocoa farmers on best practices and techniques to boost their production.

Cybersecurity Job Shortage

Economic and technology trends can also create job market shortages when the need for workers with new skills rises. For example, the expansion of cloud computing in government and healthcare services has also created an increased risk of cybercriminal activity. Cybersecurity professionals are needed to keep business and government systems safe from ongoing hacker threats. There is, however, a shortage of workers with the skills needed to fill this career specialty. The U.S. Bureau of Labor Statistics (BLS) reports that there were 209,000 unfilled cybersecurity job openings in 2015. The BLS also projects that the demand for cybersecurity professionals will rise by 18% between 2014 and 2024.

RELATED TERMS
  1. Demand

    An economic principle that describes a consumer's desire and ...
  2. Soft Commodity

    A commodity such as coffee, cocoa, sugar and fruit. This term ...
  3. Dollar Shortage

    A dollar shortage occurs when a country lacks a sufficient supply ...
  4. Seller's Market

    A market condition characterized by a shortage of goods available ...
  5. New York Board Of Trade - NYBOT

    A commodities exchange in New York that trades futures and options ...
  6. Coffee, Sugar and Cocoa Exchange ...

    A commodities exchange formed in 1979 for trading coffee, sugar ...
Related Articles
  1. Financial Advisor

    What Drives The Price Of Chocolate?

    The price of chocolate is driven by many factors, and chocolate lovers need to understand what can impact our ability to satisfy our chocolate craving.
  2. Investing

    Could the World Run Out of Chocolate?

    Chocolate lovers, beware! Is it time to start stockpiling your favorite brands?
  3. Investing

    Why the Cocoa Market Is Worried About Mondelez's Hershey Bid (MDLZ, HSY)

    Amid Mondelez's $23 billion bid for Hershey, it’s the cocoa market participants who are most worried.
  4. Insights

    The 4 Countries That Produce the Most Chocolate

    Discover the four countries in the world that manufacture the largest amount of chocolate and learn basic facts about the chocolate industry.
  5. Investing

    How To Valuate The Market Price Of A Commodity

    We explain how to analyze the market price of commodities including, gold, cocoa, and wheat.
  6. Insurance

    The Cancer (and Other Drug) Shortage

    Your doctor may not tell you, but even in the U.S., life-saving drugs can be in short supply. Here's what to know and do.
  7. Personal Finance

    The Economic Effects of Food Shortages

    Learn about the effects of food shortages on the economy and social order, and why lack of food isn't necessarily about lack of production.
  8. Insights

    Introduction To Supply And Demand

    Find out all about supply and demand and how it relates to your daily purchases.
  9. Personal Finance

    Outsource This!: The Top 10 Jobs for Millennials

    Millennials should consider careers in these areas for better initial opportunity, job security and even solid wages.
RELATED FAQS
  1. Is demand or supply more important to the economy?

    Learn more about the impact of supply and demand in an economy. Find out why companies study supply and demand as part of ... Read Answer >>
  2. Is the law of supply and demand a law or just a hypothesis?

    Learn about the strengths and limitations of supply and demand economic theories, and how they are used to predict and guide ... Read Answer >>
  3. Do the laws of supply and demand ever not apply to markets?

    Learn about the laws of supply and demand in a market-based economy, and how they can be distorted by regulation, monopolies ... Read Answer >>
  4. How do companies measure labor supply in human resources planning?

    Find out how and why a company's human resources department would measure labor supply, and what policies would address a ... Read Answer >>
  5. Are there any exceptions to the law of demand?

    Learn more about the law of demand and if exceptions exist for different products. Find out more about how price elasticity ... Read Answer >>
  6. Do supply and demand always cancel each other out?

    Learn more about supply and demand and how these factors drive economic activity. Find out more about demand elasticity and ... Read Answer >>
Hot Definitions
  1. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center