The weight of agricultural prices in political debate, their searing importance to the poor, and their common association with unusually low agricultural output levels often lead to policies that focus directly on prices at the expense of other underlying economic relations. In contrast, this book’s objective is to focus explicitly on agricultural price policy in the context of economic growth and, more specifically, of technological change.
In the recent past, and in some cases even now, developing countries have followed foreign trade, exchange rate, and domestic policies which have so grossly distorted agricultural prices as to call for a single-minded focus on removing those gross distortions. We note such circumstances and their causes but look beyond "once-and-for-all" price adjustments to the process of technological change and the institutional changes that go, pari passu, with technological change. Agricultural price policy is important to those processes, and it is that interaction to which we constantly return.
The importance of agricultural price policies to development motivated the International Food Policy Research Institute to undertake the research, the papers, and the discussions that generated this book. The papers were prepared by the senior research staff of the International Food Policy Research Institute in the course of their in-depth research programs. Emphasis is given to the complexity of the issues. In some chapters, this is best brought out by exposition of the relationships themselves, with only modest reference to illustrative data. Other chapters are strongly empirical and deal with particular situations in order to show interactions. The book focuses on applied problems of developing countries; the purpose throughout is to inform practical policymaking.
1. Agricultural Price Policy - the Context and the Approach
I. The International Environment for National Price Policies
2. Trends in Cereal Supply, Demand, Trade, and Stocks
3. Changing Patterns of Variability in Cereal Prices and Production
II. Domestic Market Intervention
4. Pricing Principles and Public Intervention in Domestic Markets
5. Public Stock Management
6. Risk and Uncertainty in Domestic Production and Prices
7. Foreign Trade Regime, Exchange Rate Policy, and the Srtructure of Incentives
8. Relative Prices in the People's Republic of China: Rural Taxation through Public Monopsony
9. Determination of Administered Prices of Foodgrains in India
III. Production Response, Technology, and Commercialization
10. Capital Accumulation, the Choice of Techniques, and Agricultural Output
11. Technological Change, Production Costs, and Supply Response
12. Policy for Rapid Growth in Use of Modern Agricultural Inputs
13. Government Credit Programs: Justification, Benefits, and Costs
14. Food Subsidies: Consumer Welfare and Producer Incentives
15. Implications of Food Aid for Price Policy in Recipient Countries
16. Agricultural Price Policy for Accelerating Growth