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 | Wild-goose chase No please-all rule in farm prices Our Correspondent The good news for the inflation-wary Government is that wheat production in the country has been good and procurement will be 21 million tons this year. "The procurement has already reached 19.8 million tons (MT) and we expect that it would reach 21 MT," Food Corporation of India chairman and managing director Alok Sinha said. It is significant that the Government had procured 11.1 MT last year for supply under the public distribution system (PDS), whereas the target was 15 MT. Augmented supply, accompanied with a ban on exports, will almost certainly help bring down prices in the domestic market. The Government is feeling some relief; last week, Agriculture and Food Minister Sharad Pawar announced that the Government would not import wheat this year. But when prices come down, there would be the issue of proper remuneration to farmers, especially in the light of the prevalent rural distress. There is the mechanism of minimum support prices (MSPs). But it is not sufficient to take care of the problems agriculture is facing. This brings us to the dilemma the Government faces all the time in our country: if farm prices go up, agriculturists gain but others suffer; if prices don't rise, the entire populace benefits save the farmers. But farmers are also a very large section of the population; in fact, they are numerically the largest in terms of vocation. Thanks to the socialist-paternalist mindset of our ruling class, the dilemma leads to the search for a just and fair equilibrium: a policy framework that gives fair MSP or compensation without fleecing the consumer. Needless to say, the search for such a framework is a wild-good chase. For, in the first place, the just equilibrium is unlikely to exist; it is akin to looking for a woman whom every man would agree to be the most beautiful woman of the world. Secondly, even if such equilibrium were to exist, the kind of politicians and bureaucrats we have, they are not competent and honest to discover it. The result is that, in their quixotic venture, the powers that be often end up prescribing and administering cures that prove to worse than the disease. For instance, the International Food Policy Research Institute (IFPRI) said recently that there should not be ban on exports of agricultural goods. According to IFPRI Director General Joachim von Braun, while a country that enacts agricultural export bans, high export tariffs and price controls may reduce its risks of food shortages in the short-term, these measures are likely to backfire by making the international market smaller and more volatile. Are our political masters listening? Posted on : 5/22/2008 Mail this article to your friend |