Study equilibrium price and quantity changes in Pearson Edexcel A Level Economics through demand and supply shifts, market diagrams, data tables and applied analysis.
Sources for use with Section C
The market for rice in Japan
Figure 1 The price of rice January 2024–April 2025 (Yen per 5 kg bag)
Figure 2 Land used for rice (million hectares), 2000–2023
Extract A The price of rice
Rice is a staple food in Japan and it is considered to be a necessity by consumers. After years of declining consumption of rice, demand has been rising since 2023. Demand for rice increased by 110 000 tons to 7.02 million tons for the first time in 10 years between June 2023 and June 2024. Part of the explanation was that demand for rice among foreign visitors to Japan rose from 19 000 tons in June 2022 to 51 000 tons in June 2024. Also, the Nankai Trough earthquake alert in August 2024 caused stockpiling by restaurants and consumers, leading to excess demand.
In addition, the price of rice rose because of high temperatures in 2023 that reduced the quality and quantity of rice produced. Rice production cannot be changed overnight. It takes months of planning and is significantly influenced by seasonal conditions, land use and water management. However, the Government does hold stocks of rice to prevent large price fluctuations.
Extract B The future of rice production in Japan
The future of rice production in Japan is uncertain. Firstly, there was a 25% decline in the number of rice farmers between 2015 and 2020. Secondly, the average age of the remaining rice farmers is increasing. Only 11.3% of rice farms are operated by farmers who are under the age of 50.
A further issue affecting the future of rice production is climate change. For example, in some years heatwaves have delayed growth, reduced yields, and even destroyed entire harvests.
Extract C The environmental impact of rice production
To produce one kilogram of rice requires an average of 2 500 litres of water. Rice production uses over a third of the world’s irrigated water. Rice production also contributes to climate change, with methane, a greenhouse gas, emitted by flooded paddy fields. This factor is responsible for 10% of total global methane emissions. Further, the impact of climate change is expected to reduce the output and nutritional value of rice as average temperatures rise.
To meet future demand, global rice production will need to grow by 25% over the next 25 years. However, changes in production methods are helping to limit climate change and conserve water. For example, direct seeding reduces water use by up to 20% and greenhouse gas emissions by up to 50%.
With reference to Figure 1 and Extract A, analyse one demand factor and one supply factor that explain why the price of rice increased between January 2024 and April 2025.
Illustrate your answer with a supply and demand diagram.
With reference to Figure 2 and Extract B, examine two factors that might cause a shortage of rice in Japan in the future.
