2024 ASRJC Prelims H1 Econs (QP)

1 © ASRJC Economics Department 8843 / JC2 Prelim / 2024 [Turn over ECONOMICS 8843/01 Paper 1 23 August 2024 Additional Materials: Answer Booklet 3 hours READ THESE INSTRUCTIONS FIRST An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 9 printed pages and 3 blank pages. ANDERSON SERANGOON JUNIOR COLLEGE JC2 PRELIMINARY EXAMINATION Higher 1

2 © ASRJC Economics Department 8843 / JC2 Prelim / 2024 [Turn over Answer all questions Question 1: Agriculture and food Figure 1: Annual change in field crop prices, intermediate foods and feeds prices, and all-food prices from 2003-2022 Note: Examples of intermediate foods and feeds are processed products such as wheat flour and soybean oil. Source: Economic Research Service, US Dept of Agriculture, 27 June 2024 Extract 1: Agriculture R&D and technology adoption INCREASING R&D SPENDING ON AGRICULTURE Doubling government funding for agricultural research and development (R&D) would have tremendous environmental and economic benefits according to a new commission paper in the Journal of Agricultural and Applied Economics. However, increasing R&D funding would require a significant new commitment from policymakers. After reaching a peak in 2002, spending on the United States ( US) public agricultural R&D has fallen by one -third over the past two decades. With a doubling of R&D spending, agriculture productivity is expected to rise by 62% in the US and 44% globally. This, in turn, would reduce crop and livestock prices and make US farmers more competitive internationally. Greater R&D funding and productivity can significantly slow farmland expansion. Doubling R&D spending is projected to reduce global emissions by about 213.4 million metric tons of carbon dioxide equivalent per year. This is largely driven by avoiding deforestation and other conversion of la nd to cropland. Emissions from fertiliser, fuel use, livestock, and other sources are also projected to be lower as scientific advances and technological innovation enable farmers to use inputs more efficiently. All-food price index Intermediate foods and feeds price index Field crop price index

3 © ASRJC Economics Department 8843 / JC2 Prelim / 2024 [Turn over Substantial new investments in agricultural research will yield extensive dividends. Such funding is pivotal to maintaining US dominance in global agricultural exports, curbing future food inflation, and positioning the agriculture sector as a leader on climate change and other environmental issues. AGRICULTURE TECHNOLOGY ADOPTION Agriculture technology (agtech) has an adoption challenge. Farmers’ responses reveal that agtech adoption varies markedly across geographies, and the hesitant adopters are particularly wary of unclear rate of returns (ROI) and high prices. European and North American farmers lead global agtech adoption, with about 61% currently using or planning to adopt one agtech product in the next two years. North American farmers cite high costs and unclear ROI as their biggest challenges to adopting farm -management systems. Farmers in Europe, while also most concerned about high costs, report complexities in setup and use as an additional major barrier to adoption. Agtech product adoption is lowest in Asia, with only about 9 % of farmers using or plannin g to use at least one agtech product; adoption varies between countries in this region as well. Source: The Breakthrough Institute, 11 January 2024 Extract 2: How China’s insatiable demand is changing the durian industry in Southeast Asia China’s "craze" for durian has been the driving force behind the 400% surge in global demand for the fruit between 2021 and 2022. China accounted for 91% of global demand, importing US$6 billion worth of the fruit, in those two years. At the forefront of sustaining China’s hunger for durian are Thailand and Vietnam, with Malaysia also being a top supplier. Thailand, the first country permitted to export fresh durian to China, saw its durian exports to China surge to $3.75 billion last year, according to Tha iland government data. This is an increase from $128 million in 2012. Durian now accounts for 25% of the export of the country’s four main agricultural products, the other three being rice, rubber and cassava. The high demand from China has prompted Thai land’s farmers to consider growing durian instead of other crops such as rice and maize . The area used for durian cultivation has risen by 80% over the past 12 years and durian is now grown everywhere instead of being concentrated in a few eastern provinces as in previous years . The agriculture ministry has warned that the massive surge in durian production could lead to an oversupply and export quality control issues. Source: VN Express International, 25 June 2024 Extract 3: Higher grocery bills for Canadian families Every year, Canada’s Food Price Report tabulates what an annual healthy grocery basket would cost for a family of four . Last year, it forecasted that a typical family would end up paying $1065 more for food in 2023, bringing the annual family tally to $16,288. But while the Report correctly forecasted the increase in food prices, it was off in terms of what ended up going into the grocery basket — mostly because consumers cut corners and ate less or downgraded to cheaper alternatives in order to pay for other higher family expenses.

4 © ASRJC Economics Department 8843 / JC2 Prelim / 2024 [Turn over As it turned out, the typical family ended up spending $15,595 on food this year, even as the prices of individual items in their grocery cart increased. “In other words, despite higher food prices, they spent $693 less due to changes in shopping habits," the Report says. Source: CBC News, 7 December 2023 Extract 4: True cost of cheap food is health and climate crises The true cost of unhealthy food is a spiralling public health crisis and environmental destruction, according to a high -level commission. It said the food and farming system in the United Kingdom (UK) must be radically transformed and become sustainable within 10 years. The commission criticised decades of government policy aimed at making food cheaper, fuelling rising obesity and other health problems. “The true cost of cheap food is simply passed off elsewhere in society – in a degraded environment, spiralling ill health and impoverished high streets,” said the commission. The UK had the third cheapest basket of food in the developed world, but also had the highest food poverty in Europe, in terms of people being able to afford a healthy diet. Type 2 diabetes, a diet-related illness, costs the UK £27 billion a year. The commission also said agriculture produced more than 10% of the UK’s climate-heating gases and was the biggest destroyer of wildlife. It noted that the number of key species has fallen 67% since 1970 and 13% of key species are now close to extinction. Source: The Guardian, 16 July 2019 Extract 5: UK food giant calls for higher fat, sugar and salt taxes One of the country’s biggest food firms has said ministers should consider taxing products high in fat, sugar or salt to combat the obesity crisis. James Mayer, president of Danone UK & Ireland, said: “The UK food industry’s efforts to improve the health profile