Parity Pricing As An Approach to Price Support Programmes: A Policy Analysis

M. Afzal


The responsiveness of farm entrepreneurs to changes in
agricultural prices, even in a traditional agrarian setting, is well
established. Research on Pakistan's agriculture by Afzal [1], and Gotsch
and Falcon, [6] have shown that the response of farm producers to prices
is positive and rational, and that they allocate their resources to crop
and livestock activities under the influence of prices and other
relevant economic parameters instead of being guided by sheer
traditions. Desired development objectives in the farm sector can,
therefore, be realized through judicious manipulation of the prices of
farm pro¬ducts and farm inputs. Policy makers have quite a few options
to obtain desired changes in agricultural prices. These options range
from direct intervention in the marketing of agricultural produce and
supplies, to price fixation, international trade regulation, and the

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