ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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The Wheat Market: Distortions Caused by Government Interventions

Wheat stocks are rising again, well beyond the minimum required, and a large procurement is expected from the 2009-10 wheat marketing season that begins on 1 April. India appears set once again for yet another phase of rising stocks, mounting carrying costs, and a crisis of plenty. The volatile cycles of rising and falling stocks appear to be the result of poor government intervention, in particular, poor procurement policies. It is argued here that unidirectional revisions in the minimum support price create serious demand and supply imbalances and extreme volatility in buffer stock cycles.

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