The UN's Food and Agriculture Organisation has inadvertently rubbished the claims of local agriculturists that support prices are critical for the success of farmers and are in the interest of the economy by showing that withdrawing support prices on wheat actually increased availability and reduced consumer prices, while still allowing farmers to make a reasonable profit. T
he data presented by FAO is a clear indicator that letting the market determine commodity prices can work out well for farmers and consumers, with the option to import or export the commodity, as appropriate, always on the table as a means to ensure price stability.
The government should instead step back and stick to a regulatory role to ensure that hoarding and other forms of supply and price manipulation are punished.
Fair pricing and competition are also keys to innovation. In the context of agriculture, free markets encourage farmers to diversify, explore new crop varieties, and adopt modern agricultural technologies to meet consumer preferences. This can also increase productivity and sustainability, which are vital for addressing challenging climatic conditions.
It is worth noting that diversifying crops has also been a major headache for federal and provincial governments for several decades, as farmers continue to sow crops that are unsuited to their areas or to Pakistan in general, because the existence of support prices gives them guaranteed profits, regardless of the negative impact of their crop choices on the country.
Rice, for example, is a water-intensive crop, and Pakistani rice farming is among the most wasteful because farmers refuse to adopt modern strategies to reduce water requirements just because it would require learning something new.
As for the risk of farmers taking financial hits due to bad weather or other unforeseen circumstances, the government needs to expand financial literacy programmes and make crop insurance more accessible to ensure farmers can navigate bad years without emergency government intervention.
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