Considerable effort and attention has been devoted to market-oriented reforms in the manufacturing and financial sectors and in physical infrastructure. While these are undoubtedly important sectors, there is very little by way of research on agricultural market reforms—loosely defined as deregulation of agricultural markets.
With large sections of the population in developing countries still dependent on agriculture for their livelihood, the importance of agricultural market reforms can hardly be exaggerated. What are the sorts of regulations faced by agricultural markets across various countries? What are the key drivers of these regulatory barriers? What is their impact on agricultural productivity and the income levels of farmers?
A recent paper by Giuliano and Scalise attempts to answer some of these questions. Their analysis focuses on the abrupt deregulation of agricultural markets in many developing countries in the late 1980s. Their results suggest that the sudden and strong decline in the international price of agricultural commodities played a crucial role in destabilizing the financial equilibrium of marketing boards, leading to agricultural marketing reforms (deregulation). This process of reform was also assisted by changes in rural representation in the political arena and government ideology.
But perhaps more important than these specific results is the new dataset compiled by the authors on agricultural market regulations in 88 developing countries from 1960 to 2003. These data offer an exciting opportunity to better understand an important yet relatively underexplored area of economic reforms. It would be very helpful from the point of view of policy to look at the impact of agricultural market reforms on factors such as agricultural productivity, farm-size, choice of commercial vs. subsistence farming, choice of crops (commercial vs. traditional) and income level of small farmers.