Policies that Influence Producer Incentives

4.1 The Setting 55

4.2 Agricultural Prices and Their Determinants 56

4.2.1 Basic Price Concepts 56

4.2.2 Structural Determinants of Agricultural Prices 57

4.3 Trade Policy 58

4.3.1 Basic Issues 58

4.3.2 Tariffs in Developing Countries 62

4.3.3 Export Incentives 67

4.3.4 Trade Restrictions 68

4.3.5 Policies for Food Aid 72

4.4 Exchange Rate Policy 74

4.4.1 The Role of the Exchange Rate 74

4.4.2 Exchange Rate Policy for Agricultural Development 77

4.5 Fiscal Policy and Economic Prices 80

4.6 Macroeconomic Policy Options for Agriculture 82

4.7 Sectoral Policies that Influence Agricultural Prices 86

4.7.1 Price Controls 86

4.7.2 Farm Support Prices 87

4.7.3 Strategic Reserves and Grain Market Liberalization 89

4.7.4 Instruments of Grain Storage Policy 92

4.7.5 Market Development 93

4.7.6 Farm Prices and Agro-Industries 94

4.7.7 Input Markets 96

4.7.8 Additional Considerations about

Prices and Markets 97

4.8 Food Security, Agricultural Prices and the Rural Poor 98

4.9 Observations on Price Stabilization and Economic Development 103

Discussion Points for Chapter 4 104

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