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Would Indian farmers benefit from liberalization of world cotton and sugar markets?
Author(s) -
Mittal Surabhi,
Reimer Jeffrey J.
Publication year - 2008
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.2008.00301.x
Subject(s) - protectionism , liberalization , economics , production (economics) , agriculture , developing country , agricultural economics , sugar production , free trade , international economics , sugar , business , market economy , economic growth , macroeconomics , ecology , biochemistry , chemistry , biology
Rich‐country support programs for cotton and sugar producers are frequently claimed to be detrimental for developing‐country farmers. This study investigates whether a reduction in protectionist policies for Organization for Economic Cooperation and Development cotton and sugar producers would have a measurable effect on the welfare of Indian farmers. The fact that these sectors are intensively regulated within India might suggest that any such effect will be small. However, this study shows econometrically that prices in Indian rural markets closely follow world prices, and that Indian farmers are flexible in the medium to long run in changing production according to price signals from these markets. Depending on the crop and the nature of liberalization, producer surplus increases from 4.2% to 22.3% in the long run.