AGRICULTURAL PRICE POLICY INTRODUCTION Price is an instrument which can be used to achieve certain objectives. MEANINGS I is the determination of prices of agricultural inputs like fertilizers, seeds, pesticides and other appliances as well as output like rice, pulses, cotton and wheat etc. by the government or authorities in the good of farmers and consumers. IMPORTANCE Determination of a favourable price level for farmers and consumers is very important. A suitable price level is that by which cultivators need suitable profit to continue their production in every season and consumers need agricultural products at desirable level. A suitable agricultural price holds the key to development in an under developed economy CRITERIA FOR DETERMINING PRICE LEVEL Objectives ++Criteria a) Cost of Production of the crop. b) Intercrop relative profitability, c) Impact on cost of living. d) Production in response to input use (input — output ratio) e) International prices f) Domestic demand, supply and stock position. 9) Effect on industrial cost of production, ' ol E POLICY. Change in out put price, Change in input price. Research into higher yielding varieties Direct Intervention by the government OBJECTIVES. 1 INCREASE in OUTPUT. Main object self sufficient in wheat / sugar. Increase in price —+ production (high profit) 2 IN INCOME 01 Low real per capita income — provides subsidies on inputs + outputs to increase income. 3 BLE TERI Export primary — import finished goods, Can give incentives for local luction. Export finished —+ reduce imports, Better balance of payments fluctuation in Binders. 4 iS ED_CROPPI Influence the crops either by subsiding inputs or by increasing minimum price,5, REMOVAL OF RURAL URBAN DISPARITIES. Rural — under developed —+ low per capita income. Urban —+ Developed —- higher per capita income. 6. ENCOURAGEMENT OF INVESTMENT. Government influences the prices of agricultural inputs / outputs to encourage investment profit. 7. TO USE IMPROVED SEEDS AND FERTILIZERS. Price Incentives. 8, IMPORT SUBSTITUTION. Subsidy / minimum price / more profit. 9, BALANCED increase in production. Wide range of inter crop profit — disturbs availability of less profitable. 10. EFFICIENT USE OF RESOURCES. Stimulates production — per unit cost less — capture international market. Maintair competitiveness: 11. LOAN POLICY. More credit — profit margin — people will take more loans. 12. STAB! 1Y ICES. Minimize fluctuations — tendency. 13. TAK NUE. To Generate Tax —more income —+ more taxes. 14, IND! Raw material at suitable price, 15, JGGLING. To check smuggling. FORMS OF INTERVENTION IN PRICING OF FARM PRODUCTS. (a) ADMINISTRATIVE PRICES, |. Support Prices (Fixed Price) ii, Procurement Prices (Industrial Raw Material /Food grain) lil, Issue Prices (consumers al lower than market price) (b) INFLUENCING SUPPPLY AND DEMAND OF A COMMopITY. tery itr gerry (c) CREATION OF INFRASTRUCTURE FACILITIES.Fair and reasonable prices. PROBLEMS (IN Ac! /EMENT OF OBJECTIVES) 1. Capricious climate li, Pests and plant diseases iii Water logging and salinity. iv Poverty (no Stay power) v. Illiteracy (not aware of policy) vi. Rapid Change in Government (Inconsistency) vil. Narrow Markets (intermediate More active lack of transport system) vili Defective planning (unauthentic statistical data) ISSUES: 1.FIXED PRICE BELOW INTERNATIONAL LEVEL Low input and out prices encouraged smuggling to India Afghanistan. 2. HEAVY EXPORT DUTY ON COTTON: Reduced domestic price. 3. SUPPORT PRICE OF WHEAT &RICE: Farmers normally opt to sell in open cash market lower than support price. 4, RESTRICTION ON MOVEMENT Inter district province restriction on wheat depressed price in surplus. 5. CONTROLLED PRICE OF GHEE: Artificially controlled depressed price of oil seed etc. IMPORT OF AGRICULTURE COMMODITIES: Freely input of agricultural goods at concessional price. BARTER: For export of agriculture goods against import of machinery lesser value. . SUBSIDIES: More advantage is obtained by big land lords. . EXPENSIVE INPUTS: Even subsidized mounts burden. 40. NO SYESTEMATIC DEVELOPMENT: No attempt other problems hamper. © ono CONCLUSION: ‘An agricultural price policy by itself cannot necessarily serve as a grand design for major institutional or technological change. It can serve limited goals and its success will depend upon it being supplemented by coordinated effort in other related areas.