The shape of the supply-price function

 While in some underdeveloped economies with a large peasant sector, aggregate agri-
 cultural supply functions are thought to be negatively rather than positively price elastic,
 recent trends in the West Indies indicate that the supply price function for all agricultural
 commodities is generally positively elastic, and not least so in areas of peasant produc-
 V tion. In fact there are sound indications that peasant responses to price increases up to
 1957 were greater than those of estates. This is probably due partly to the fact that estate
 lands have not been so easily extended as have peasant lands and also to the fact that es-
 tate labour costs have increased as greater peasant opportunities have emerged.

 The amount of substitution of one crop for another which can take place following rela-
 Stic price changes is somewhat limited by physical conditions in some places, and also to
/ some extent by organisational factors. If, for instance, no mill exists nearby to accept
 deliveries, sugar will not be grown; or one might cite the case of specialisation in arrow-
 root in St. Vincent and nutmeg in Grenada which has been partly due to the existence of
 marketing organizations. Some substitution has undoubtedly taken place in response to rel-
 ;a\ve price changes, but we believe that this has been marginal in the case of export crops
 and has probably seriously affected the production of roots and vegetables only. Root crops
 may actually have declined in acreage or remained static. The output of vegetables and
 other domestic foods has not increased in line with population increases.

 We consider therefore that price-supply responses have been positive for most of the
 main export products, although not necessarily positive for domestic food crops. The re-
 lationship is not measurable in quantitative terms, partly because the price levels, which
 have tended to stimulate supplies, have been price levels of an undefinable period. In tree
 crops, for instance, we consider that until recent years, memories of pre-war prices,
 and fears of a return to such levels of prices may have inhibited some expansion, while for
 most of the shorter term crops, last season's prices will probably have had a greater in-
 fluence in the amount supplied.

 Returns to growers
 Table 4. 5. vi shows recent est mated gross returns per acre per annum for various
 crops.

 Although production costs have been estimated for various crops these have been gene-
 rally for one or two farms only. Only for rice have properly sampled studies been made
 (Ref. S.b.2. and S.b.3.) 2/. One of the problems however is that straight comparisons be-
 tween estate and peasants are meaningless since the peasant and his family undertake most
 of the work on a peasant farm.

 Considering peasant production alone, however, some calculations made at various tim(
 for national income estimates indicate very roughly the receipt per acre for labour and
 profit after all outgoings have been met. These figures indicate that where banana can be
 grown it is the most profitable crop for peasants in terms of returns per acre. In terri-
 tories where banana is not grown, sugar is generally more profitable than ground provi-
 sions, vegetables or coconuts, on a per acre basis.

 2/ A cost survey for cocoa has been undertaken in Grenada.