AAE/NutSci/Agro 350

Homework #2

Food Supply and Demand

Instructions: This problem set asks you to apply what you've learned about food supply and demand, elasticities, and technological change, to understand some real-world issues (one historical the other contemporary.) Please make answers that are short and to the point. Many of the questions can most easily be answered by drawing a graph but you do not need to include a graph for each question unless it explicitly asks for one. Please make sure you add an explanation of any image or graph.

Your answers are due on Canvas (March 15, 11:59pm) as a file. (It may be easiest to draw out the graphs by hand and scan/screenshot it to submit it.)

Questions:

1. With the onset of World War I, in 1915, the Russian Tsar drafted hundreds of thousands of soldiers from rural areas into the Russian army. This led to a 1% reduction in the agricultural labor force growing their staple crop (wheat) during the 1916 growing season.

1. What happens to the supply curve for wheat in 1916?

Draw a picture of the curve and how it changes due to the loss of agricultural labor.

1. What happens to wheat prices due to this loss of agricultural labor? (assume people eat the same amount if they are on farm or in the army).

Draw out the original supply and demand equilibrium for the country and the new equilibrium and price level.

1. Assume Russian farmers sold all the wheat they produced: what likely happens to their income? What happens to the relative income of urban people who do not produce wheat, only consume it?

1. The Tsar brings you in to advise him on what to d about the food crisis. He wants to reduce the price of wheat and asks you to consider three policies (listed below.) For each policy, would the suggestion reduce the price of wheat, lead to a famine in rural Russia, or both. Explain your reasoning.
   1. Seize all the wheat farmers have stored up in their granaries to sell on the market.
   2. Set (and enforce) a national price for wheat that is 25% below the current market level price of wheat.
   3. Force farmers to work on government farms rather than their own farms to produce wheat for the government.

1. In West Africa there is a crop calledfonioLinks to an external site.,Digitaria Exilis, that is very nutritious and grown and eaten by poor farmers. It is also considered a luxury good for the wealthy in Senegal, who serve it at fancy occasions (baptisms, marriages, etc.). Fonio is now gaining international acclaim in part due to a Senegalese chef in New York, Pierre Thiam. (See his TED talk on foniohere) Chef Thiam hopes to make it the "next quinoa" by creating a big export market for fonio in the US.
   1. What happens to poor Senegalese farmers if there is a price increase of fonio due to increased demand for the crop?
   2. Do you think poor Senegalese farmers will eat more fonio or less fonio? What elasticities would you need to know about to figure this out?
   3. Fonio is a nutritional powerhouse that is especially high in iron. Let's say Senegalese fonio farmers decide to sell all their fonio for export to hip fonio eating New Yorkers and replace those calories in their own diet with corn, which has half as much iron as fonio. What are the potential nutritional consequences for Senegalese farmers? How might your answer be different if selling fonio doubled the farmers' incomes (hint Bennett's law would apply here).
   4. A team of UW researchers started a project to improve fonio seeds so that the yield (output per acre) would go up. If they succeed in making a higher yielding fonio seed variety, what are the likely effects on the supply and demand for fonio?

Ref: https://www.healthline.com/nutrition/fonio#types

https://www.ted.com/talks/pierre_thiam_a_forgotten_ancient_grain_that_could_help_africa_prosper?language=en TED