Incentive prices for farm produces
Saturday, 3 July 2010
Anwarul Iqbal
Farmers in one season who produce amply but do not get good returns, are likely to under-produce in the next season, leading to scarcity of that commodity and its higher price at retail levels. Thus, there are many sides to the production and finally the consumer level prices of such goods, to be considered to get or disperse benefits at all levels.
First of all, there has to be a proper assessment of demand situation about a farm product ranging from its internal demand as well as the external one to be met through exports. Policy supports should be provided to encourage production of the total demanded quantities and its effective marketing, leaving incentives at different tiers. The case of potato production this year can be cited here as an example. Farmers all over the country, particularly in the its northern region, produced this year more the targeted production. The producers of some early varieties of potatoes gained from receipt of high prices at the outset. But this trend did not persist as the full produce came to the markets and the excess production, in the absence of adequate preservation, helped to create a glut-like situation. This, in turn, caused a big drop in prices. This has been the case with a number of other farm produces over the years.
The producers at different times are found to be in a bad mood and many of them say that the wholesale prices are hardly enough to match their production costs, not to say anything about leaving a decent profit to them. Under such circumstance, farming will remain unremunerative for the farmers. This is quite logical. The farmers do otherwise get enthusiastic about higher production when governmental supports in the form of reduced price of the requisite fertilizers, liberal credit supports etc. are made available to them. These inspire the farmers to produce more. But when it later leads to an imbalance between demand and supply, causing dropping of prices at below cost level, this creates conditions for losses for the farmers.
A mismatch in production cost for produces and their prices below the same in the market are great disincentives for the farmers. This is witnessed in cases of some vegetable products. This causes net losses for the producers.
What would be the ways of coming out of such predicaments on a sustainable basis ? First of all, the authorities need to be alert and suspend imports of those agro-produces that would be at the cost of the local producers. A crash programme needs to be started all over the country to set up refrigeration units of perishables close to the areas of production and users should find the charges for their use affordable. The government can declare special incentive measures for the exporters of such goods. Even local food-processing industries can be benefited very liberally by government's fiscal measures for them to use much greater quantities of the primary produces.
Farmers in one season who produce amply but do not get good returns, are likely to under-produce in the next season, leading to scarcity of that commodity and its higher price at retail levels. Thus, there are many sides to the production and finally the consumer level prices of such goods, to be considered to get or disperse benefits at all levels.
First of all, there has to be a proper assessment of demand situation about a farm product ranging from its internal demand as well as the external one to be met through exports. Policy supports should be provided to encourage production of the total demanded quantities and its effective marketing, leaving incentives at different tiers. The case of potato production this year can be cited here as an example. Farmers all over the country, particularly in the its northern region, produced this year more the targeted production. The producers of some early varieties of potatoes gained from receipt of high prices at the outset. But this trend did not persist as the full produce came to the markets and the excess production, in the absence of adequate preservation, helped to create a glut-like situation. This, in turn, caused a big drop in prices. This has been the case with a number of other farm produces over the years.
The producers at different times are found to be in a bad mood and many of them say that the wholesale prices are hardly enough to match their production costs, not to say anything about leaving a decent profit to them. Under such circumstance, farming will remain unremunerative for the farmers. This is quite logical. The farmers do otherwise get enthusiastic about higher production when governmental supports in the form of reduced price of the requisite fertilizers, liberal credit supports etc. are made available to them. These inspire the farmers to produce more. But when it later leads to an imbalance between demand and supply, causing dropping of prices at below cost level, this creates conditions for losses for the farmers.
A mismatch in production cost for produces and their prices below the same in the market are great disincentives for the farmers. This is witnessed in cases of some vegetable products. This causes net losses for the producers.
What would be the ways of coming out of such predicaments on a sustainable basis ? First of all, the authorities need to be alert and suspend imports of those agro-produces that would be at the cost of the local producers. A crash programme needs to be started all over the country to set up refrigeration units of perishables close to the areas of production and users should find the charges for their use affordable. The government can declare special incentive measures for the exporters of such goods. Even local food-processing industries can be benefited very liberally by government's fiscal measures for them to use much greater quantities of the primary produces.