Hi all,
It is believed in general that terms of trade in favor of agriculture reduces poverty levels, particularly in Rural India. Increase in price levels in agricultural goods should affect in principle the poor because of lack of affordability. These incremental prices could benefit the producers, still, in Indian context, it is believed that sizeable share of profit margins are shared by the middlemen, not the producers. How could then the terms of trade benefit the poor?
Thanks.
Well your real concern seems to be middlemen eating away the bulk of farm profits due to a price rise of farm products. This is a very serious issue in India's agrarian sector which primarily runs on exploitative motives even today. There is a very deep rooted nexus between these middlemen or dalals, Panchayat level leaders and rural money-lenders many of whom are either whole sellers (or their agents) or the middlemen themselves. Govt. is uninterested to abolish middlemen as they are key political agents as well, contributing to the vote bank. Rural poor in India are heavily dependent on money lenders and no one would ever attempt to make poor farmers financially self-sufficient and self-reliant. The small and marginal farmers have to be allowed direct access to the whole-sale market which is impossible without political will and commitment.
Generally, the issue centres on trading in manufactured vrs commodities and this has the policy implications of tarrifs, subsidies within the Free Trade movement. A good discussion on trade, terms of trade, trade gains and inequality under the general theme of globlisation in a historical sense is provided by Williamson (2011) in his book "Trade and Poverty". Whiles its fails to treat the poverty connections and explains the inequality depeened by trade (to my view) it provides a sort of historical basis for understanding the divergence beteen the Global North and Global South. It may be helpful in conceptualising the subject matter.
The agricultural producers should not rely upon the middlemen/traders for marketing their produces. They have generated and they have to form their own organization to market their own products to the consumers i.e. amul model.
Dear S.J. Balaji, free trade between two person or two countries is beneficial for both sides and improves their conditions. Only trade cannot overcome the poverty, but it can positively affect on the level of poverty.
- Badges
- Science topic
- Similar topics
- Economics