AgrlculLure CrlLlcal lssues

W Agricultural Pricing policy

EIIects what and how much to produce
Can signiIicantly eIIect income distribution, especially
small Iarmers
W The Iirst two decades saw policies which negatively eIIected
the incentives Ior Iarmers.
W The government`s main concern was to keep the cost oI Iood
low Ior industrial workers and provide cheap raw materials Ior
domestic industries.
r|c|ng po||ces before green
revo|ut|on
W eLall prlces of food gralns flxed aL low levels
depresslng prlces for producers
W Peavy exporL duLles were levled on coLLon
whlch reduced domesLlc prlces for Lhe beneflL
of local lndusLry
W Monopoly procuremenL of wheaL and rlce aL
arLlflclally low prlces ln order Lo mlnlmlze
subsldles Lo consumers
r|c|ng po||ces before green
revo|ut|on
W lnLerdlsLrlcL and lnLer provlnclal resLrlcLlons
on movemenL whlch depressed prlces for
producer prlces ln surplus areas
W Cvervalued exchange raLe meanL LhaL exporL
proceeds were lmpllclLly Laxed 1he lndusLrlal
secLor beneflLed from cheaper lmporLed
machlnery and oLher lnpuLs
r|c|ng po||ces before green
revo|ut|on
W 1he heavy proLecLlon of Lhe lndusLrlal secLor
aL Lhe cosL of agrlculLure falled Lo produce and
efflclenL and vlable lndusLrlal base for Lhe
economy
W lor nearly a decade afLer lndependence no
vlable aLLempL Lo develop Lhe agrlculLure was
made
r|c|ng po||ces before green
revo|ut|on
W -o resLrlcLlons on lmporLed commodlLles
whlch comblned wlLh Lhe overvalued
exchange raLe furLher depressed domesLlc
prlces
W lL was assumed LhaL farmers would noL be
prlce senslLlve and would produce efflclenLly
regardless of Lhe prlce Lhey recelve
r|c|ng dur|ng Green kevo|ut|on
W 1he flrsL sLep was Lo subsldlze agrlculLure
lnpuLs
ln 1960's and 1970's and exLenslve subsldy
program coverlng seeds ferLlllzers planL
proLecLlon Lube wells and farm machlnery
Cnly Lhose large producers who were leadlng Lhe
green revoluLlon were able Lo beneflL
gr|cu|tura| r|c|ng Comm|ss|on
W AC was seL up ln 1981 ln reallzaLlon of Lhe
lmporLance of prlces as lncenLlves
W 1he governmenL lnLroduced mlnlmum prlce
supporL program whlch shlelded Lhe farmers
from severe flucLuaLlons ln lnLernaLlonal
markeL and lnsured a mlnlmum reLurn
W ollcles Lo brlng prlces close Lo lmporL/exporL
parlLy levels Lhus reduclng Lhe lmpllclL Lax on
agrlculLure
gr|cu|tura| r|c|ng Comm|ss|on
W equlremenLs
Carefully deslgned prlce slgnals Lo promoLe a
balanced producLlon of producLs so as Lo fulflll
domesLlc consumpLlon
MalnLaln sLable prlces for consumers
1he pollcy should help Lo achleve and malnLaln
equlLable Lerms of Lrade for agrlculLure and
supporL lncome of farmers