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Agricultural policies are designed in conjunction with the input and output of the agricultural products that extensively influence the prices considerably. There are very few countries in the world that have their economy dependent only upon the agricultural products. The fruits and vegetable, wheat and cotton all make a good proportion of the economical growth in countries like Pakistan and India. The issue off the agricultural pricing still remains a lively debatable issue where the price fluctuation sometimes become so much exaggerated that it becomes difficult for the survival of the farmers and the lower income families (Braverman et al, 1987).
The other countries like Malaysia and Indonesia have been the other countries that are depending on their rubber products made from the rubber trees. In the advent of the world crisis, they also saw a decline in their exports causing the prices to fluctuate. But the problem really lies in the agricultural policies rather than crisis or the disasters. The agricultural policies must be designed in conjunction with the suitability of the people of that area. This makes it easier for the farmers and the low income families to work out the situations.
Agricultural policies are designed in order to make the supply and demand flow at an equilibrium position. The microeconomics review of the situation states that the farmers are most of the times is leading a miserable life. In the subcontinent region, the situation is far more critical. The prices of the urea and other fertilizers are increasing rapidly and whereas the prices were kept low resulting in many farmers leaving this profession because of their inability to pay the taxes and to raise their family efficiently (Braverman, & Hammer, 1986). These acts of farmers have resulted in government to take extreme steps as they finally increased the retail price of the agricultural products. The prices are not only dependent upon the number of farmers, but it is also dependent upon the large factory owners who have the equipments to refine the products such as wheat crushing units, thus result is the dictation of the values from different perspectives. In these stages the government is then bound to increase the imports from other countries.
This is the situation in the developing countries like Pakistan and India who are mostly called as agricultural economy. Whereas in the developing countries the situation is different as in USA the farmers are given relaxations and rebates they plough the fields with different agricultural products. This helps in the production of the food material inside the country and becomes extra beneficial in one way or the other.
Supply and Demand:
The natural disasters in the country are the major setback to the economy of the country. The natural disasters most of the times are the catalyst factor in the increments of the agricultural pricing and whatever anyone says these are not the part of the policy at all. The disasters like flood and earthquakes are the major reasons that make the flow of the supply and demand to suffer and leave its position of equilibrium (Braverman et al, 1983). This leads to the sudden shortage of the agricultural products and the import becomes inevitable. At this situation the country that exports products to a country asks for more amounts then what is present in the market which is paid due to the obligations of the needs. This also increases the price of the agricultural products in the international market. This whole situation causes problems at one face and the benefits at the other and the agriculture products which are usually used as food becomes a healthy business regardless of the needs and desperation of the people who need them urgently. This allows for the foundation of an international community that must keep an eye on the international market trends and formalize a policy that is acceptable to all in all the conditions and will allow in the solution of the disaster with minimum fuss and at a very low cost as required (Bambang et al, 2007).
Fluctuations in International Markets:
The agricultural phenomenon is like the oil. The oil consumption can never be minimized because of everything that is around us requires it. The energy production and other stuffs all require oil and for this reason the international market is always filled with the hype of the oil prices.
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The oil prices like other things are dependent upon the supply and demand. The supply and demand dictates the prices of oil. Recently the fluctuation in the oil prices that were seen saw an increase of around $150 and a decrease to around $45. The reason for this change was the international market became a victim of the hypes and the international investors didn’t know whether the oil will be in such need in the future or not. This one point led to the destruction of various financial markets. The slump in the United States afterwards devastated the whole world and agriculture pricing were one of the affected one. What could be the main cause of the pricing slump of the agriculture and how it can be managed to be kept at a certain point requires lot more study with reference to policies of the countries around the world.
Determination of Policies:
It has been just recently when the policy makers have shifted their interest towards the hunger population for a more precise devising of the agricultural strategy. The 70% of the poor population of the world in comprised in the rural areas, thus stating that even as the agricultural products are produced in the rural lands, why still there is a problem of hunger and starvation (Bambang et al, 2007). The problem keeps on encouraging the fact that policy designs are not up to mark as they don’t include the rural population in the benefits and losses of the economy. To keep the pricing stable it is important to get to know the real issues that are present and correct the false interpretations and the problems of the agricultural related professionals. This indeed will help in the stable flow of the demand even if the supply increase. The proper feature of the policy should be to provide relaxation in taxes and subscriptions and the provisions of the luxury to the farmers and the agricultural related professionals (Bambang et al, 2007). This is the fact that a person can live without electricity but can never live without the food, so bearing this point in mind; the government should take certain brave steps to change the whole situation regarding the pricing of the agricultural products.
Determination of the agricultural policy has become far more political than before because it certainly impacts the equity, consumption, income distribution, production and economic development. Even in the developed countries, though the ratio of the production is very low, still it represents a major portion in the economic development, consumption and production. A better analysis of the low income families around the world depicts the fact that these families consume most part of their income on the food and when the prices increase, their income ratio become considerably lowers and this does not happens for the high income families who don’t spend much for the food and therefore can easily cope up with the situation even if the prices get high. Thus the problem really pertains for the low income families and in most of the developing countries, the number of low income families is more 90%. Thus any affect in the pricing policies will virtually disturb most part of the population and even if the international prices fluctuate or some disaster comes in any part of the world, they are the ultimate affecters (Arulpragasam & Conway, 2003). The pricing policies are designed to benefit the urban population including the public employees and also the military. So these groups are taking all the initiative of the food and somehow on the expense of the farmers. Government cannot solely change this situation because otherwise the burden on the budget will more probably hurt all the processes of the country. It is only then when the rural representation becomes a part of the democratic government and look for a change in the policy which most makes the local prices much more than the international price which will increase the stakeholder benefits but not the farmer. These stakeholders are the industry owners who have the license to export and import and sell their products in the country. Though they receive their products at much cheaper rates, but can increase their prices due to their managing of the monopoly.
The farmers on the other hands are quite reluctant to still crop the food related agricultural crops because in either way, if the prices increase they must a supply of the food (Bambang et al, 2007).
What they do is that they keep a good proportion of the food for them and sell the remaining. If they opt for some other non food crop they are risking their food supply thus they are virtually bound to do what they are doing.
Nevertheless, the policy has to be shifted and changed considerably. The problem occurs only in the developing countries and IMF is there to play its role in the favor of developed countries by making the governments to increase the taxes and other rebates on the low income families. The international trade has significantly suffered from the policies of World Trade Organization in conjunction with the World Bank and IMF. There impact on the country’s policies is what that is allowing the economies to become more and more vulnerable to the international market price fluctuations.
Arulpragasam and Conway, 2003, “Partial Equilibrium Multi-Market Analysis,” Chapter 12 in F. Bourguignon and L. A. Pereira da Silva (Eds.) The Impact of Economic Policies on Poverty and Income Distribution: Evaluation Techniques and Tools, Washington, D.C.: World Bank and Oxford University Press.
Bambang, S., Sumaryanto, A. Croppenstedt and S. DiGiuseppe, 2007, “An assessment of the impact of rice tariff policy in Indonesia: a multi-market approach,” ESA Working Paper No 07-18, Agricultural Development Economics Division (ESA), Food and Agriculture Organization of the United Nations, Rome, Italy.
Braverman, A., C.Y. Ahn and J.S. Hammer, 1983, “Alternative Agricultural Pricing Policies in the Republic of Korea: Their Implications for Government Deficits, Income Distribution, and Balance of Payments,” World Bank Staff Working Papers, No. 621, Washington, D.C.: World Bank.
Braverman, A. and J.S. Hammer, 1986, “Multimarket Analysis of Agricultural Pricing Policies in Senegal,” Chapter 8 in Singh, I., L. Squire and J. Strauss (eds.), Agricultural Household Models: Extensions, Applications, and Policy, Baltimore, MD.: The Johns Hopkins University Press.
Braverman, A., J. Hammer and A. Gron, 1987, “Multimarket Analysis of Agricultural Price Policies in an Operational Context: The Case of Cyprus,” World Bank Economic Review, 1(2): 337-356.
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