Agriculture Reference
In-Depth Information
promising. The New Strategy of Agricultural Development, articulated in the
Fourth Five-Year Plan (GOI 1970), marked a bold step beyond previous policies.
A policy of combining high-yielding varieties of seeds with a package of com-
plementary inputs in selected but widely distributed water-assured areas was pro-
posed. The availability of scarce foreign exchange to import fertilizer and other
inputs to support the program was given priority. Investments in agricultural sup-
ply industries were encouraged. Reorganizations of programs in research, ex-
tension, and rural credit, which had been initiated earlier, were accelerated and
given greater support. However, what marked the most significant departure from
the old ways was the seriousness and sincerity with which the policy recom-
mendations were translated into action, the so-called “political will.”
An integrated food and agricultural policy emerged. Food management
operations of the government attempted to achieve the objectives of (1) in-
creasing production by encouraging adoption of new technology, (2) stabiliz-
ing relative prices, and (3) protecting the consumption levels of low-income
groups. An Agricultural Prices Commission was established in 1965, and so
was the FCI, to make the price policy effective. Even though the specific du-
ties of the FCI have changed over time, its main objectives have remained the
same: (1) providing price support to farmers by procuring foodgrains at a re-
munerative price; (2) distributing foodgrains throughout the country at “fair”
prices; and (3) maintaining buffer stocks to ensure national food security. In
achieving these objectives, FCI was envisioned to operate competitively with
private traders. The guiding premise was that, unlike private traders, a public-
sector agency could act in the social interest. Given its size and financial
strength, it was expected to secure for itself a commanding position in the food-
grain trade.
Pakistan
Pakistan's tradition of government intervention, in the form of food rationing,
was inherited at independence in 1947; the objective was to mitigate seasonal
price swings in the major urban centers that resulted from arbitrage failure
brought on by inadequate infrastructure. In the early 1970s, it was recognized
that farmers in general and small farmers in particular had neither adequate stor-
age nor sufficient financial capacity to hold on to their marketable surplus in the
hope of getting better prices later. This problem was the impetus for the for-
mation of the PASSCO in 1973.
4
Funded by the federal government and six
4. PASSCO accounts for only about one-fourth of the wheat procured; PFDs procure the
other three-quarters. However, their mandates are different. PFDs supply wheat to private flourmills
at a fixed price that does not cover all expenses and, thus, involves substantial consumer subsidies.
PASSCO supplies wheat to the designated public-sector agencies and recovers all its procurement
and marketing costs through its sale price. PASSCO also maintains the country's strategic reserve
of foodgrains.
