Agriculture Reference
In-Depth Information
changes in the underlying rationales for intervention. The fourth section dis-
cusses policy responses to changing rationales; and the fifth one evaluates the
performances of price stabilization policies over the past three decades. The
chapter concludes with a summary of the major issues and a discussion of their
implications.
Food Policy and Parastatals in Asia
Although underlying conditions were similar, policy design, implementation ap-
proaches, and reforms in later years have varied widely among the countries. Poli-
cies have been implemented through parastatals in India, Indonesia, and the
Philippines; a state agency (Directorate of Food) in Bangladesh; a combination
of parastatals and state agencies in Pakistan; and parastatals without direct in-
volvement in procurement and distribution in Vietnam. The following are brief
country-by-country overviews of how parastatals and supporting policies evolved
over time.
India
The great Bengal Famine of 1943 triggered the tradition of public intervention
in India. The Famine Enquiry Committee Report, as well as subsequent stud-
ies, concluded that the root cause of famine was the failure of markets in re-
sponding to supply shortages in Bengal (that is, lack of spatial integration),
rather than the availability of foodgrains in India as a whole, in that particular
year.
2
Thus, the central premise for heavy public involvement was to address
the perceived inability of private traders to ensure efficient allocation of essen-
tial commodities across space and time. Government actions focused on en-
suring a steady flow of supplies at “reasonable” prices to consumers through
domestic production supplemented by imports whenever production suffered a
setback. Until about 1965, consumers were generally assured of a minimum
supply, but a guaranteed income to the producers remained an elusive promise.
3
Two major events coincided to prompt a change in policy. First, in 1965/66
and 1966/67 the country experienced two consecutive droughts of unprece-
dented severity that reduced foodgrain production almost 20 percent below
their previous best levels. India was in crisis; it was bailed out only by a large
volume of U.S. food aid that severely strained the country's pride. Second, in
1963 the new high-yielding wheat varieties (HYV) were first grown experi-
mentally in India, and by 1966 prospects of the Green Revolution appeared
2. Sen's (1981) interpretation of famine, the entitlement failure, differs from this view.
Although Sen's works have been extremely influential, many have disagreed with his view. See
Devereux (2001).
3. This concern was based, in part, on the assumption that production responds slowly to
price, but price responds swiftly and inexorably to demand or to fluctuations in supplies.
