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The Demand For Bananas And The Economic Effect Of Supply Restriction

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  • Chadwick, J. B.
  • Nieuwoudt, W. L.

Abstract

The wholesale demand elasticity of bananas was estimated at between -0,52 and -0,66 for the short run and between -0,65 and -0,71 for the long run. Estimates of demand elasticities using Time Varying Parameters varied between -0,62 and -0,93, also indicating that the demand becomes less price elastic during summer months. Retail elasticities were estimated at between -1,42 and -1,52 for the short run and at -1,79 for the long run. The social cost of the banana control programme is estimated at between 7,8 % and 12,68 % of income transfer between producers and consumers in marketing areas. The impact of cut-backs in banana production where entry is free (any farmer can produce bananas) is to increase prices in marketing areas, but depress prices in production areas. It is uncertain whether farm income can be increased significantly through such a scheme even though the demand is inelastic, if the supply of good banana land is not limited.

Suggested Citation

  • Chadwick, J. B. & Nieuwoudt, W. L., 1985. "The Demand For Bananas And The Economic Effect Of Supply Restriction," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 24(2), October.
    • Handle: RePEc:ags:agreko:267083
    DOI: 10.22004/ag.econ.267083
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    References listed on IDEAS

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    1. van der Meulen, John, 1958. "The Demand for Bananas in the Sydney Wholesale Market," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 26(03), pages 1-10, September.
    2. Richardson, Robert A., 1976. "Structural Estimates Of Domestic Demand For Agricultural Products In Australia: A Review," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 44(03), pages 1-30, September.
    3. Bruce Gardner, 1983. "Efficient Redistribution through Commodity Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 225-234.
    4. Foote, Richard J., 1958. "Analytical Tools for Studying Demand and Price Structures," Technical Resources 316560, United States Department of Agriculture, Agricultural Marketing Service, Transportation and Marketing Program.
    5. Nieuwoudt, W. L., 1977. "Seasonal Variations In Price, Production And Total Income Of Selected Horticultural Products," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 16(3), July.
    6. Aggrey-Mensah, W. & Guise, John W.B., 1969. "Seasonality in the Demand for Bananas," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 37(04), pages 1-18, December.
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