Price Incentives For The Production Of High Yielding Mexican Varities Of Wheat: A Rejoinder

In his comments on my paper [1] Mr. Sarfraz Khan Qureshi triedto show that: (a) farmers faced with a choice between cultivating twotypes of wheat, i.e. local and Mexican varieties, would be guided by thenet profitability (revenue) per unit of land; and (b) a varietal shiftfrom local wheat at low prices to Mexican varieties at high prices ispossible at some 'break-even' price, provided land is a fixed factor andMexican varieties of wheat require less land but more nonland factors(costs) per unit of output than the local wheat [2]. Mr. Qureshi arguedthat the necessary assumption supporting my analysis of varietal shiftsat 'break-even prices' was not satisfied as land was not believed to bethe binding constraint during the wheat growing season. More¬over hefelt that the cultivation of Mexican varieties of wheat has not beenestablished to require more non-land factors (costs) per unit of outputthan local wheat. Mr. Qureshi goes on to say that empirical evidenceavailable from other surveys does not show that non-land costs per unitof output are relatively higher for Mexican varieties of wheat. So theprice of wheat (and the 'break-even' price analysis) is irrelevant tothe choice of the process of production. Farmers would always produceMexican varieties of wheat, thus invalidating my analysis and suggestedpolicy on the pricing of wheat.