Price Incentives For The Production Of High Yielding Mexican Varities Of Wheat: A Rejoinder

Sayed Mushtao Hussain


In his comments on my paper [1] Mr. Sarfraz Khan Qureshi tried
to show that: (a) farmers faced with a choice between cultivating two
types of wheat, i.e. local and Mexican varieties, would be guided by the
net profitability (revenue) per unit of land; and (b) a varietal shift
from local wheat at low prices to Mexican varieties at high prices is
possible at some 'break-even' price, provided land is a fixed factor and
Mexican varieties of wheat require less land but more nonland factors
(costs) per unit of output than the local wheat [2]. Mr. Qureshi argued
that the necessary assumption supporting my analysis of varietal shifts
at 'break-even prices' was not satisfied as land was not believed to be
the binding constraint during the wheat growing season. More┬Čover he
felt that the cultivation of Mexican varieties of wheat has not been
established to require more non-land factors (costs) per unit of output
than local wheat. Mr. Qureshi goes on to say that empirical evidence
available from other surveys does not show that non-land costs per unit
of output are relatively higher for Mexican varieties of wheat. So the
price of wheat (and the 'break-even' price analysis) is irrelevant to
the choice of the process of production. Farmers would always produce
Mexican varieties of wheat, thus invalidating my analysis and suggested
policy on the pricing of wheat.

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