Cambridge International as and a level Economics Ebook

SELF-ASSESSMENT TASK 
2.13
Damage to rice crop sparks price rise fears
It has been reported that the Rice Exporters Association 
of Pakistan (REAP) has expressed concerns over damage 
to rice paddy in the Punjab during recent heavy rains 
and the eff ect that these will have on rice prices. In the 
Punjab, 10% of cultivated rice fields have been damaged 
and production has been lost. REAP’s chairman believes 
that this is likely to increase domestic prices for Basmati 
rice by 20%.
Floods and heavy rains have particularly hit Karmoke 
and Muridke where production is expected to be 50% 
down. Elsewhere, the crop loss has been less; in Sialkot 
it is 10–12% down, Pasroor 20% down and in Hafizabad 
just 5–7% down.
REAP’s chairman, Jawed Ali Ghori, has pressed central 
government to take immediate measures to address 
the problems faced by growers. He commented that 
‘Every year we face a disastrous situation’ and urged the 
government ‘to take preventative steps to avoid such 
problems in the future’.
Source
: 
The Express Tribune
, 5 September 2013.
Read the feature below and then answer the questions that follow.
1
Using the information provided, calculate the likely 
price elasticity of supply of Basmati rice in the 
Punjab in 2013. Explain what this means.
2
Explain why the price elasticity of supply might vary 
between diff erent parts of the Punjab.
3
Comment on whether you feel the data in the feature 
are accurate.
4
Briefl y describe the supply measures that might be 
used by the Pakistan government ‘to avoid such 
problems in the future’.
Flooded rice fields in Pakistan
54
Cambridge International AS Level Economics

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product range if it is seen as worthwhile as a result of the 
price rise.
Th
e PES is particularly relevant in agricultural 
markets. For valid climatic and geographical reasons, it 
is oft en diffi
cult and sometimes impossible for producers 
to increase crops or switch to more lucrative ones when 
price rises. Producers may not have the additional land, or 
conditions may not allow them to grow a crop when price 
has increased. For example, coff ee growers in Brazil or tea 
growers in Kenya cannot suddenly switch to growing corn, 
irrespective of the increase in price of corn. Even if they 
could, it would take time and there would be the added 
risk that prices may well have fallen.