Agriculture Reference
In-Depth Information
policy reversals have sent mixed signals to the private sector. For promoting
private-sector participation, it is imperative to have continuity in policy and a
consistent framework, which has been lacking in Pakistan. Also, a private sec-
tor is not likely to emerge if the government continues to maintain a large buffer
stock and its agencies occupy a large share of markets, as these activities reduce
arbitrage opportunities for traders. Second, we argue that subsidy bills can be sub-
stantially reduced by (1) revising buffer-stock procurement downward, (2) set-
ting the ration price to flourmills at the full procurement price, and (3) allowing
private imports in years with normal harvests. There are several parameters that
need to be determined in implementing these policies, but that perhaps is the easy
part. The difficult part is the considerations of political economy, which often
overpower economic arguments in deciding food policy issues.
