Agriculture Reference
In-Depth Information
tion of India (FCI), continues to enjoy preferential treatment under a host of reg-
ulations (Chapter 3). The authors of Chapter 3 argue that, given the current level
of technological know-how and the improved strength of risk-management in-
stitutions, such as commodity exchanges and credit institutions, continued prac-
tice of old policies largely highlights the political challenges to reform.
The experiences of Pakistan have been unique in terms of the institutional
mechanisms for intervention. The country uses both a parastatal, Pakistan Agri-
cultural Storage and Services Corporation (PASSCO), and Provincial Food De-
partment (FPD) to carry out procurement, stocking, and distribution in domes-
tic markets. On the other hand, the import of wheat, which averaged about two
million tons until 1999-2000, is the responsibility of the Directorate General
of Food in the Ministry of Food, Agriculture, and Livestock. The chapter sug-
gests that, while the PFD has suffered losses, PASSCO has operated with no
budgetary and financial support from the government, except subsidized cash
credit to finance the commodity procurement operations. During the period be-
tween 1985-86 and 2002-3, PASSCO made profits in 15 out of 18 years, paid
taxes, and even paid dividends to its shareholders (Chapter 4). However, as the
PFD and the Directorate of Food occupy the larger share, the costs of inter-
vention continue to be high.
The findings of the Bangladeshi case study are very different from those
of the other two South Asian countries. By reducing public intervention, Ban-
gladesh has been able to increase competition in domestic markets, reduce food
subsidy bills, and allocate more resources to development and anti-poverty
projects without jeopardizing food price stability (Chapter 5). The grain mar-
ket liberalization has released funds for SSNs, helped develop innovative SSNs,
and contributed to building critical rural infrastructure. Furthermore, the coun-
try has also been able to develop programs that incorporate short-term food
security, such as disaster mitigation, and long-term development goals by build-
ing infrastructure and improving nutritional status of the future labor forces.
However, the chapter argues that there is room for further improvement.
A common message from these three case studies is that a fundamental
challenge of liberalizing South Asian grain markets is delinking SSN programs,
which have evolved as part of the procurement-stocking-distribution policy.
The public stocks, procured through minimum support prices, are normally re-
leased through public distribution under a variety of SSNs for the poor. Even if
efficient resource allocation is ensured by relying on private trade, the need for
SSN programs will persist. How can the goal of efficient resource allocation be
achieved? The chapter on Bangladesh provides success stories, and the Indian
case study examines cost-effectiveness of a host of food-based SSN programs
and offers suggestions for reforms. Based on their results, the authors argue
that, from the efficiency point of view, delinking SSNs would involve a grad-
ual move away from universal public distribution to more targeted public works
programs in the short run. However, the chapter emphasizes that the eventual
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