Agriculture Reference
In-Depth Information
signed and discussed. The above discussion on the Indian case is indicative of
the nature of questions and policy instruments that can be used to address the
concerns of stakeholders and usher in a new system that is more efficient and
sustainable than the current parastatal-dominated food system.
GOVERNMENTAL ROLES IN THE FUTURE . Changing the current paradigm
does not mean a complete withdrawal of government from the market. With
millions of people living in absolute poverty and many geographic locations
lagging behind, governments will continue to have to play active roles in pro-
tecting low-income or vulnerable people, managing the consequences of natu-
ral disasters, and improving market infrastructure and institutions. As high-
lighted in chapter 2, credit and insurance markets—two critical instruments for
agricultural risk management—are still poorly developed, and these problems
may be acute in remote geographic areas.
However, the good news is that food subsidies and costs of inefficiencies
have become so large that the necessary public investments could be financed
from the funds currently going to subsidies without the loss of benefits, result-
ing in a win-win situation. Targeted SSNs for the poor, reduction in public stocks,
and enforcement of wider price bands will release funds for investment in pub-
lic goods—such as roads, ports, sewerage, and rural electrification—which have
higher returns in terms of developmental impacts in the long run. Importantly,
these types of investments may also reduce political risks associated with liber-
alized food markets and thereby may promote policy stability and consistency—
key factors in promoting desirable private investments in the system.
In the context of the changes proposed in this topic, a critical government
role will be to develop an efficient information management system. Imple-
mentation of desirable price bands, targeted SSNs, and stock holding in strate-
gic locations will all be information-intensive activities. For instance, the pol-
icy of variable tariffs will be effective only if timely data and analyses are
available on international prices, exchange rates, domestic prices, and produc-
tion at various locations. Similarly, because poverty can be chronic or transient,
particularly in the geographically disadvantaged areas, effective targeting will
require monitoring and updating the vulnerability information at various loca-
tions. If the countries gradually move toward cash-based safety nets, such as
food stamps or food credit cards, success will depend on setting up and updat-
ing a database containing the locations and profiles of the poor and developing
the infrastructure required to make the programs work.
These are challenging tasks and might even have sounded utopian 20 years
ago. However, times have changed. The levels of information technology, as
well as the human capital to implement and promote them, have grown dra-
matically in the Asian countries. India is perhaps a good example. The country
successfully introduced electronic voting machines in the May 2004 national
election—just 3.5 years after the recount drama in the 2000 U.S. presidential
election; outsourcing of high-tech jobs to India has been making headlines for
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