This caused the prices of bananas to skyrocket. Despite intense lobbying from international banana marketing groups at that time, the then Australian Labor Government decided not to relax quarantine laws to allow any banana imports into Australia.
Many boats and yachts were destroyed due to the gale force winds of Yasi. Now banana growers outside cyclone-affected areas are looking forward to bumper prices as demand outstrips supply. North Queensland provides 90% of Australian bananas and Cyclone Yasi destroyed 75% of the plantations. That, of course, was before the floods in early January and now cyclone Yasi. It remains the costliest tropical cyclone to hit Australia on record (“Cyclone Yasi to cost insurers AUS $3.5 bln – forecaster”, 2011). In February 2011, the Queensland banana industry was devastated by Cyclone Yasi. Banana Plantations were heavily affected by Yasi. The banana shortage led to huge prices for bananas in Australia.
Pages 8 This preview shows page 4 - … TROPICAL Cyclone Yasi has caused widespread damage and personal loss to Far North Queensland but the overall economic impact for the year is expected to be limited, experts say. Combining the elasticity estimates with information on turnover, we get an estimated welfare loss of 600 million dollars per year due to banana import restrictions. While the demand for bananas is comparatively elastic School Nairobi International School of Theology; Course Title DEPARTMENT BBM 312; Uploaded By newtonmuthumbi19. Picture: AP Strict banana quarantine laws mean growers are sheltered from international competition. 1.0 Introduction Cyclone Yasi tore through north Queensland and damaged Australia's banana farms in 2011, creating a shortage of bananas (“Cyclone Yasi to See Banana Prices Stay High Till Midwinter”, 2011). Prices of bananas fall after crops recover from Cyclone Yasi Bananas lie on the ground at Innisfail after Cyclone Yasi devastated most of North Queensland's banana crop. With the law of demand, we assume that natural disaster has a negative effect on the supply and demand for goods and services.
After the Cyclone, banana prices were as high as $12.00 per kilo. While the demand for bananas is comparatively elastic supply is inelastic due. supply response after these cyclones, leading to positive exports years after cyclones have hit and re-planted banana plants have become productive.