A Note on Farmer Response to Price in East Pakistan

During the past decade, increasing attention has been given tothe role of agriculture in the process of economic development. Oneaspect of the discus¬sion has concerned the significance of relativeprices for farmer in decision¬making. Recent studies have yieldedestimates of supply elasticities for jute in East Pakistan, and forcotton, wheat, and several other crops in West Pak¬istan, so that abasic body of information is beginning to emerge. The main purpose ofthis note is to supplement these studies by presenting estimates of theprice elasticity of supply for rice in East Pakistan. However, sincerice and jute are the main alternate crops in East Pakistan, supplyelasticities for jute will also be presented. Because of fluctuations inagricultural yields due to variations in weather conditions, the acreageresponse to price has generally been estimated rather than the outputresponse. Significant changes in the size and timing of the monsoonrains in East Pakistan make it particularly important in this case touse acreage changes as a measure of farmer response to price. Inputsothers than land, such as fertilizers, better seeds, andplant-protection measures are not widely used in East Pakistan; andapparently, these measures are not very responsive to price changes. Atleast, no statistically significant relationship exists between therelative price of rice (to jute) in one year and rice yields in the nextyear. An increased price for rice results in an extension of riceacreage,) but it does not result in significantly more intensivecultivation. Under these conditions, the price elasticity of acreageclosely approximates the elasticity of planned output2