Detrimental incentive pricing of staple grains
Domestic agricultural price policy difficulties
In the past, the cost of growing grain (wheat, rice, maize, barley) compared with alternative forms of production has generally been low, whereas the value of production (in relation to alternative use) has been high. Increasing, the real value of the grain output is being transmitted to the farmer who, with the aid of high-yield varieties, irrigation and fertilizers, is responding to the challenge. These techniques have met with greater response amongst the large and medium scale farmers, with the danger that small farmers will be largely confined to subsistence production. This would intensify social and employment problems, and widen disparities between incomes. There still remains the difficulty of ensuring that incentive prices to farmers do not cause hardship to consumers.
[Developing countries] As developing countries approach self-sufficiency and begin to produce grain surpluses in favourable seasons, their policy problem of adapting to international market requirements at competitive prices, becomes the same as that of the developed countries.