Qat and the law of supply and demand

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Qat_2The Wall Street Journal had an article today on a little-known narcotic plant called Qat. It is popular in Yemen, Ethiopia, and a few other places, but most authorities don't look too kindly on the use of the plant. Qat causes a mild narcotic euphoria - think way too many espressos. Erowid, a directory of information about psychoactive substances, describes the experience of chewing the leaves of Qat like this:

The experience of khat chewing is often compared to other stimulants, similar to a strong dose of caffeine or a low dose of cocaine. Commonly reported effects include an increase in energy and alertness, increased physical endurance, mild euphoria, increased talkativeness, and cheerful mood. Physiological effects include increased heart rate, blood pressure, and wakefulness.

Yemeni officials have decided that now is a good time to try to get farmers to replace qat with other crops, particularly coffee. High food prices seem to create the right environment for such an initiative. Shabbir Ezzi, an Indian businessman, has invested in a project to get farmers to switch:

We decided to appeal to the farmers from a commerical angle, explaining to them how coffee in the long run is higher in value than qat...No matter what language anyone speaks, everyone understands one common language: money.

But reducing the supply of qat - absent any change in demand - should simply increase the price of qat until it equlibriates with changes in overall food prices. To make matters worse for Mr. Ezzi and the Yemeni authorities, I suspect that the demand for qat is even less elastic than the demand for cigarettes. As the WSJ remarks, "[c]hewing qat is a way of life for many here, and demand is strong."


Ryan Hahn

Operations Officer

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