Liberalized grain markets have several key implications
for PHL (Table 2.4):
a. Farmers need to be better organized, act collectively,
and acquire stronger group business and marketing
skills in order to capture the opportunities offered by
liberalized grain markets.
b. The withdrawal of the state from grain storage and
marketing, depending on the management of the
state managed grain boards, may have left a vacuum
in grain handling and storage know-how at the commercial
level. The skills of private sector traders and
trade associations need to be substantially strengthened,
particularly because greater inter-temporal
price variation increases the risks associated with
holding stocks. This risk, which was occasionally subsumed
by government-controlled marketing boards,
yet not necessarily successfully, has now been
transferred to farmers.
c. Quality norms are now set within the value chain rather
than by marketing boards. This increases the potential
premium for quality but is also a basis for discounting
the price of poor-quality grain at the farm gate.
d. Greater price variability makes the cost of purchasing
grain uncertain. For defi cit producers, reducing PHL
makes more of their own production available for
consumption and reduces the quantity of grain that
needs to be purchased to meet household needs.