Question

CASE:

Governments get involved in agricultural output markets to stabilize prices of agricultural goods so that producers get reasonable prices. Pakistan’s agriculture sector recorded a slow growth rate of 0.85 percent during the last fiscal year (2018-19). It’s very important to enhance agricultural production to increase farmers’ income, imports reduction and to expand export base of the country. The National Agriculture Emergency Program plans to spend Rs.290 billion in the next five years to boost the sector. The program will be implemented with the coordination of all provinces to improve productivity of major crops i.e. wheat, sugarcane, cotton, rice etc.

Requirement:

Being student of economics identify appropriate price policy measure which government can opt to motivate the farmers and increase agricultural productivity. Logically discuss how the identified price policy will boost the agricultural production.

Answer 1

Explanation:

In order to motivate farmers and boost production, the government should take following initiatives;

• Cut down the middle distributor and provide a direct sale from farmers to government to give farmers the maximum price for their crops.
• Subsidize the value of fertilisers to farmers
• Give bonuses to farmers that yield highest production from their farms

Impact of Policy :

Now all these measures will encourage farmers to get better production, because the more they produce the more they can sell and get more money out of this