Estimation of Supply and Demand Elasticities for Major Crops Produced in Pakistan

Abstract

Thisarticlestudiesthe supply and demand of major Pakistani crops. We estimatesupply elasticities usinga Nerlovian partialadjustment processanddemand elasticities usingthe Deaton and MuellbauerAlmost Ideal Demand Systems (AIDS). We usesecondary data from various Household IntegratedEconomicSurveysand Agricultural Statistics of Pakistan. Our estimated supplyelasticities with respect to price liebetween 0.1 and 0.5 for all crops. Pulses tend to have higher elasticities than traditional crops such as wheat and rice. Demand elasticities with respect to price tend to beinelastic, with the exception of poultry andfruit which appearto be luxury items. Pulses are income inelastic, implying that consumption may not rise significantly asper capita incomesand thatthe introduction of yield enhancing varietieswill lead to lower prices.