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    Agricultural Price Policy in Pakistan

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    Rohail
    The government of Pakistan previously pursued agricultural price policies from the 1960s aimed at providing cheap food and raw materials. This included monopoly procurement of wheat and rice at low fixed prices, export duties on cotton, and import subsidies. However, these policies were based on false assumptions that farmers would not reduce production in response to low prices. In reality, the policies led to food shortages and balance of payment problems. Starting in 1972, Pakistan shifted to more positive pricing policies by adjusting exchange rates closer to market rates, changing monopoly procurement to voluntary systems, and reducing agricultural import subsidies and export duties.

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    Agricultural Price Policy in Pakistan

    Uploaded by

    Rohail
    177 views2 pages
    The government of Pakistan previously pursued agricultural price policies from the 1960s aimed at providing cheap food and raw materials. This included monopoly procurement of wheat and rice at low fixed prices, export duties on cotton, and import subsidies. However, these policies were based on false assumptions that farmers would not reduce production in response to low prices. In reality, the policies led to food shortages and balance of payment problems. Starting in 1972, Pakistan shifted to more positive pricing policies by adjusting exchange rates closer to market rates, changing monopoly procurement to voluntary systems, and reducing agricultural import subsidies and export duties.

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    AGRICULTURAL PRICE POLICY IN PAKISTAN

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    The government of Pakistan previously pursued agricultural price policies from the 1960s aimed at providing cheap food and raw materials. This included monopoly procurement of wheat and rice at low fixed prices, export duties on cotton, and import subsidies. However, these policies were based on false assumptions that farmers would not reduce production in response to low prices. In reality, the policies led to food shortages and balance of payment problems. Starting in 1972, Pakistan shifted to more positive pricing policies by adjusting exchange rates closer to market rates, changing monopoly procurement to voluntary systems, and reducing agricultural import subsidies and export duties.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    177 views2 pages

    Agricultural Price Policy in Pakistan

    Uploaded by

    Rohail
    The government of Pakistan previously pursued agricultural price policies from the 1960s aimed at providing cheap food and raw materials. This included monopoly procurement of wheat and rice at low fixed prices, export duties on cotton, and import subsidies. However, these policies were based on false assumptions that farmers would not reduce production in response to low prices. In reality, the policies led to food shortages and balance of payment problems. Starting in 1972, Pakistan shifted to more positive pricing policies by adjusting exchange rates closer to market rates, changing monopoly procurement to voluntary systems, and reducing agricultural import subsidies and export duties.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    AGRICULTURAL PRICE POLICY IN PAKISTANs

    Definition
    The government of a country can play an effective role in deterring as to what agricultural goods
    are to be produced, how much to be produced. The government can also regulate the prices of
    agricultural goods keeping in view the interests of the consumers as well as of the producers.
    Agricultural price policy up to mid 1960's Pakistan.
    Negative Pricing Policies.
    , the government's agricultural price policy was to provide cheap food to urban consumers and
    industrial workers, cheap raw materials to agro-based industries and to transfer resources from
    agriculture to the urban sector for investment. In the light of these objectives, the main pricing
    and trade policies followed up to mid- 1960s were as under:
    Monopoly procuring of wheat and rice at deliberately fixed low price.
    Heavy export duty on cotton which kept low prices for the farmers but benefited the local
    industry.
    Restrictions on inter-provincial and inter - district movement which depressed seed prices in
    surplus producing areas.
    Prices of vegetable ghee controlled at low level depressing prices of cotton seed and oilseeds.
    Agricultural imports at confessionals prices depressing local prices.
    Overvalued exchange rates which depressed prices of agricultural exports
    Underlying assumptions falsified:
    The above policies were based on the following assumptions:
    Those farmers would not react to low price by reducing their production and would continue to
    produce to their capacity.
    The country could be developed industrially without first developing the agriculture sector. The
    above assumptions provide to be wrong resulting in shortage of food and other products and
    balance of payment problems. It was recognized that agriculture had to be developed to sustain
    industrial development.
    This led to policies in favour of agriculture.
    Positive pricing policies from 1972
    The shift from negative to positive pricing policies has been gradual. The first major correction
    in the overvalued exchange rate was made in early 1972 when the rupee to dollar exchange rate
    was decreased from Rs. 4.76 to Rs. 11 per dollar. Thereafter, rupee exchange rate was adjusted
    to bring it closer to the market rate. Monopoly procurement was changed into voluntary
    procurement in 1960s in case of wheat and much later in case of rice. Export duty was first
    abolished in case of rice and in the recent past in case of cotton. Agricultural imports at
    confessional prices have also been reduced and phased out steps

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