Food Pricing Policy in Developing Countries: Bias against Agriculture or for Urban Consumers?

Abstract

AbstractPrice policy discrimination against agricultural producers, in order to provide cheap food for urban consumers, has been widely cited in development forums as a cause of agricultural stagnation. Evidence is presented that suggests no consistent pattern of discrimination against producers for a major food commodity, wheat. However, consumer subsidies and trade policies have reduced bread prices to urban consumers in many countries. Price data from the early 1980s are assembled for thirty‐one developing countries. Nominal protection coefficients for producers and consumers at official and corrected exchange rates and wheat‐fertilizer price ratios are estimated for each country.