South-Western EconNews

"What Would You do For a Kick-(the)-Khat Bar?"

Subject

Yemeni Farmers Cultivate a Stimulant, at the Expense of Other Crops and the Environment

Topic

Supply and Demand; Economics and the Environment

Key Words

Supply, Demand, Stimulant, Profits, Environmental Costs

News Story

Yemeni farmers have discovered a new cash crop: khat, a product that grows like tobacco and, when chewed, produces a stimulant known as cathinone. When chewed in sufficient quantities, cathinone affects people like an amphetamine. Farmers can typically earn 3 times more cultivating khat than they could earn in other occupations, making it one of the most profitable industries in Yemen.

The drug is the basis for social life in Yemen, as men gather together, chew the leaves, and engage in lively conversation throughout the afternoon and evening. Also, as farmers plant khat in terraces high in the mountains, they engage in environmentally appropriate erosion control policies by keeping the terraces in sound working condition.

Production of this crop is not without its costs, though, as production of coffee, sorghum and other cultivable crops is falling in favor of production of the far more profitable khat. Further, irrigation of khat fields depletes underground aquifers at a rate of 10 to 20 acre-feet a day. Further, pregnant women who chew khat are more likely to miscarry, and those of any age or gender who chew khat become sick more often and tend to die younger than non-khat users.

(Updated August, 2004)

Questions

1.	What happens to the price and quantity consumed of coffee in Yemen as production of khat continues to increase? Use a graph of supply and demand in your answer.
2.	If the external environmental cost of khat production could be captured and included as a production cost, what would happen to the amount of khat produced in Yemen? Why? Use a graph of external costs to support your answer.
3.	Although economics usually tries to remain objective and thus takes a positivist approach, let's go normative for a moment here. Since khat is the basis for social life in Yemen, what would you expect to happen to the economy and civilization of khat over time? Can you think of other crops and other parts of the world that might provide forecasts for what khat might do to Yemeni society?

Source

Jim Landers. "Yemen Unlikely to Kick Khat Habit." 13 June 2004. The Dallas Morning News.