MARKET-BASED PRICE SUPPORT PROGRAM - AN ALTERNATIVE APPROACH TO LARGE-SCALE FOOD PROCUREMENT AND DISTRIBUTION-SYSTEM

In most developing countries of the world, large scale public food pro curement and distribution systems (PFDS) have become too expensive for the country governments to support from their own resources. Despite high financial and administrative costs of the programs, the degree of seasonal price stabilization and price support achieved through the a ctivities remain quite low. Using the Bangladesh PFDS as a case study, this research indicates that considerable improvements in price suppo rt can be achieved by providing credit to the farmers immediately afte r the harvest. If the government procurement is reduced by 50 per cent in Bangladesh, and providing 150 per cent of the cost of running PFDS as credit, Bangladesh can improve the farmers' income and achieve bet ter stability of cereal prices at a cost less than one-third of the cu rrent costs of the PFDS, (C) 1998 Elsevier Science Ltd. All rights res erved.