REUTERS: UK Bird flu threat ruffling shuttlecock feathers Tue Mar 14, 2006 10:55 AM GMT By Catherine Hornby LONDON (Reuters) - The feathers of the badminton world are being ruffled by the threat of bird flu. Shortages of goose feathers in China and tightened manufacturing regulations are pushing up prices of shuttlecocks, the feathered projectiles hit over the net in badminton. The H5N1 epidemic has added to long-term concerns about the supply chain of feathers because it has led to the culling or deaths of some 200 million birds since late 2003. "It (bird flu) has put more pressure on the whole situation that was straining already," a spokesman for Yonex, the world's largest badminton equipment supplier, told Reuters. Shuttlecocks are traditionally made from 16 goose feathers, which are taken from under the same bird's wing and then cleaned, cut and attached to a base of Portuguese cork. "The price of a cut feather in the last six months has increased quite dramatically, somewhere in excess of 50 percent," Ian Little, owner of badminton retailer and wholesaler Yehlex said. Feather shuttlecocks rather than the plastic variety are used by professional badminton players because of their lighter weight, accuracy and the way they move through the air with a "peak and drop" effect that the plastics cannot match. The retail price of a championship grade feather shuttlecock is currently nearly one pound, but the rising cost of the feathers is set to push up prices. Another spokesman for Yonex said that the prices of their shuttlecocks had increased by around 20 to 25 percent, effective March, and Yehlex said it also plans to raise prices. The Yonex spokesmen agreed that the rising prices were partly due to increased regulation and monitoring of the feathers during manufacture. "We have had to increase the price, and that's due to processes that have had to be put into manufacturing to make sure that the feathers are okay...it has made the process more complicated," one Yonex spokesman said. The price increases are yet to have their full impact on badminton clubs, who tend to buy their shuttlecocks in bulk at the beginning of the season. "It will hit clubs with a bigger bill at the beginning of next season. Most clubs order their shuttles around July and August. It will start to hit them then," said Eric Brown, chief executive of Badminton England. The majority of shuttlecocks are produced in China, in factories, which either cut and clean the feathers themselves or buy in feathers prepared by feather farmers. Changing dietary habits in China have also contributed to the growing shortages of goose feathers. "Chinese people nowadays are tending to move away from eating goose to eating duck and that has affected the farming of goose feathers," Little of Yehlex said. Natural problems such as droughts and floods in various parts of China over the last few years have also led to a shortage of birds. Increased labour costs and a growing internal market for shuttlecocks in China have added strain to prices. "China has also started consuming shuttles now... so this has put a new pressure on the supply of feathers, a whole new market has opened up, as the Chinese start to consume their own products as opposed to just exporting" one Yonex spokesman said. The International Badminton Federation said they were encouraging research into developing more advanced plastic copies resembling the feather shuttlecocks, which could be used in the event of a serious shortage. "We're trying to move towards plastic shuttlecocks... we're hoping to find an alternative as soon as possible," a spokeswoman for the federation in Kuala Lumpur said. (Additional reporting by Sonia Oxley) Elasticity of the shuttlecocks made of goose feather for the Hong Kong Badminton Team Elasticity of demand The elasticity of demand of the shuttlecocks made of goose feather for the Hong Kong Badminton Team is inelastic because they do not have close substitutes as the news mentioned, “their lighter weight, accuracy and the way they move through the air with a "peak and drop" effect that the plastics cannot match”. So although there are plastics shuttlecocks, the Hong Kong Badminton Team still need to buy the shuttlecocks that made of goose feather, so even the price of the shuttlecocks made of goose feather increase, the Team still have to stick to them, so there will be just a small percentage drop in quantity demanded. Also, the shuttlecocks made of goose feather are the necessities for the team, so the demand for them is inelastic because the team cannot practise without them. Elasticity of supply The elasticity of supply of the shuttlecocks made of goose feather is inelastic because it is not flexible for the producers to change their output since it is not easy for the producers to find more input since it needs time for the goose to grow up in order to cut their feathers. So even if the price increases, producers cannot increase the output (shuttlecocks made of goose feather) easily, so resulting in a smaller percentage increase in quantity supplied. Also, the resources are not highly mobile, producers cannot get extra resources (goose feather) easily to increase output and also the production of shuttlecocks requires specialized skills and equipment, so the output of them cannot be increased easily, so the supply is inelastic. Type of production The production of making the shuttlecock is a secondary production because it is a process of turning raw materials (goose feathers) into finished goods (shuttlecocks). It depends on the primary production (farmers to grow goose) to provide raw material (goose feather) to it and depends on the tertiary production to provide service to sell the shuttlecocks for it. Specialization The production of making the shuttlecocks made of goose feather practises complex specialization, which means some workers are specialized in a particular sub process/stage in producing the shuttlecock. (i.e. some workers are specialized in cutting the goose feather, some are specialized in cleaning them and some are specialized in combining them into a shuttlecock) Except practising specialization, what can the shuttlecock producers do in order to increase the labour productivity? The producers can provide better welfare (e.g. medical subsidies) to the workers in order to raise their motivation to work, also they can provide a better working condition to the workers, recruit more well-trained workers and provide more high-quality capital goods (e.g. machines) What factors of production are included in the production of producing the shuttlecocks made of goose feather? 1.) Labour: The production needs workers for cleaning and cutting the goose feather and to control the machines, so they are the human effort used in production. 2.) Capital: Private capital: Fixed capital: -Machines that use in making the shuttlecocks -Factory buildings Working capital: - raw materials: goose feather Liquid capital: Money Human capital: the skills and talents of the workers P S2 S1 P2 GAIN P1 L O S S D Q Q2 Q1 Shuttlecocks made of goose feather The bird flu, the natural disasters like droughts and floods had led to a smaller supply of gooses and along with the increased labour cost, the cost of production increases, so this led to the decrease in supply (S1S2) and the demand remains unchanged, so the decrease in supply will lead to the increase in price (P1P2) and decrease in quantity transacted (Q1Q2). And because as mentioned, the demand is inelastic, so the percentage increase in price is larger than the percentage decreased in quantity transacted, so the gain in total revenue is larger than the loss in total revenue. Therefore, the total revenue rises.