news good for farming may not be good for farmers

1. CAN GOOD NEWS FOR FARMING BE BAD NEWS
FOR FARMERS
Group Number:
 Aleena Nadeem
 Maria Aslam
 Minahil Rana
 SabaYousuf

2. Introduction
• Imagine yourself as Kanas wheat Farmer.
• Because you earn all your income from selling wheat, you devote much effort to
making your land as productive as possible.
• One day, Kansas State University announces a major discovery
• Department have devised a new hybrid of wheat that raises the amount farmers
can produce from each acre of land by 20 percent
• In this case, the discovery of the new hybrid affects the supply curve.
• Because the hybrid increases the amount of wheat that can be produced on each
acre of land, farmers are now willing to supply more wheat at any given price.

3. INTRODUCTION
10,000,000
3,000,000
1,700,000
60,000
1950 1998
number of people labor force
 Despite the 70 percent drop in the number of farmers, U.S. farms produced more than twice the
output of crops and livestock in 1998 as they did in 1950.
 Advances in farm technology increased the amount in food supply, together with inelastic food
demand, caused farm revenues to fall, which in turn encouraged people to leave farming.

4. • Law of Demand:
When Price of the good rises its quantity demand decreases
and vice-versa, remaining other things same.
• Law of supply:
When price of the good rises its quantity supply also rises,
remaining other things same.
LAW OF DEMAND & SUPPLY

5. MOVEMENT & SHIFT In Demand & Supply Curve

6. ELASTICITY OF DEMAND
P1=$6 Q1=80tons P2=$4 Q2=90tons
Now, we will first calculate %change of quantity and price
%change of price = %change =
=40%
%change of quantity = mid value =
=11.7%
Demand of elasticity= > 1
So, Our demand is inelastic (Quantity demanded does not respond strongly to price changes)
100
5
6
4


100


midvalue
startvalue
endvalue
100
85
80
90


n
b
a 
40
7
.
11 29
.

.
To calculate demand elasticity=
ice
changeinpr
nded
antitydema
changeinqu
%
%

7. Price of
Wheat
Quantity of Wheat
0
$4
90
$6
80
 Now we will see whether it is good for farmers or not.
 Farmers revenue= price of wheat × quantity sold
 Before hybrid wheat = 6 ×80 = 480
 After hybrid wheat = 4 × 90 = 360
 Hence farmers total revenue falls.
$480 to $360

8. Now a question arises that if the good news for farming is a bad news for
farmers then why farmers still follow the good news??
The answer is, it is because overall it is good for economy. It cause an increases
in the supply market. For example we will see the economy of china before and
after hybrid wheat breeding.
In 1965, program for hybrid wheat breeding started.While around that time,
their wheat breeding economy was like: sown areas=13.26%
 yield per hectare=69.8%
Total output of wheat=9.27%
Overall Concluded

9. While in 1998, after hybrid wheat breeding their wheat economy was like:
sown areas=13.3%(almost same)
yield per hectare=140.00%
total wheat output=18.67%
As a while the sown area was still the same, their total wheat output changes due
to hybrid wheat breeding.
In 1965- 25,2201000MT
In 1998- 108,7261000MT