Question

14. Lack of rain in the western states has severely impacted farming. In particular, the loss of produce such as tomatoes, cucumbers, and peanuts. A. Farmers whose crops were destroyed by the drought were much worse off, but farmers whose crops were not destroyed benefited from the drought. Why? B. What information would you need about the market for wheat to access whether farmers as a group were hurt or helped by the drought?

Answer 1

Ans A - Lack of rain impacted the production of crops (tomatoes, cucumbers and peanuts), which means it impacted the supply of the produce in the market. As a result of this the supply of produce decreased and the demand remained the same, which leads to the demand being more than the supply. As the supply is less, the farmers whose crops were not destroyed supply at a higher price than the previous one because the willingness to pay for the consumption has now increased due to lack of choices. The consumers have lesser farmers to buy from because of the drought impact. Hence farmers whose crops were not destroyed by the drought were able to rip the benefits of high price and the farmers affected were not.

Ans B – Information needed for accessing whether farmers as a group were hurt or helped due to drought would be regarding the price, demand and supply of the wheat before and after the drought. This information will help find out the impact of the drought overall on the market as we as individual farmers.