As in many developing nations, basic grains in El Sal- vador have a critical importance in the rural economy and in the daily diet. Information on price elasticities of supply and demand can be crucial for better informed policy making. This article pre-tests for the suitability of price expectation models and then estimates a market model for each grain. Empirical results point out strong inelasticities in demand and supply for all grains. For maize and red beans (but not for sorghum and rice), low degrees of partial adjustment indicate their high tenden- cy to continue cultivation in spite of adverse economic conditions. © 1998 John Wiley & Sons, Inc. Introduction El Salvador has experienced the most significant advances in economic growth and urban poverty re- duction in Central America in the 1990s, although in many respects the rural sector has been left be- hind. Of particular importance to the economic health of the rural sector is the basic grain subsec- tor (maize, beans, rice, and sorghum) because it uses approximately 70% of agricultural land and these grains constitute the staple diet of the Sal- vadorian population. In spite of the importance of basic grains both in agricultural production and in food consumption, there is lack of knowledge as to how changes in prices and other factors affect their production and consumption. Lacking supply and demand function estimates, policy decisions are often taken exclu- sively on the basis of political pressures from inter- Correspondence to: Rigoberto Lopez, Department of Agricultural and Resource Economics, University of Connecticut, Storrs, CT 06269- 4021. E-mail: rlopez@canr1.cag.uconn.edu • Rigoberto Lopez is Professor in the Department of Agricultural and Resource Economics, University of Connecticut. • Hugo Ramos is a consultant with Chemonics International, San Salvador, El Salvador. Supply Response and Demand for Basic Grains in El Salvador •475 • Rigoberto A. Lopez Hugo H. Ramos Agribusiness, Vol. 14, No. 6, 475–481 (1998) © 1998 John Wiley & Sons, Inc. CCC 0742-4477/98/060475-07 The authors are grateful to the managers of the Crecer–El Salvador Project under partnership between Chemonics International in Washington, DC, and the US Agency for International Development/El Salvador. Special thanks to Ligia Luna of USAID/El Salvador for her support of the work presented here. Thanks also to the technical staff of the OAPA and DGEA units of the Ministry of Agriculture and Livestock for their assistance in data collection and model development. The authors, however, are solely responsible for the content of the paper and any remaining errors.