ABSTRACT
Agricultural development requires not only government support for research and development of better technology, but also resources at the farm level to purchase modern inputs such as chemical fertilizers and better seeds and to finance fixed capital projects. The government affects agricultural investment in various ways through its financial policies. The banking system extends agricultural loans to the collectives for production purposes. Government financial policies toward agriculture determine the level of state resources allocated by the government to agriculture. Government price policies are probably the most important and powerful policy instruments that the government can use to affect the incomes of the agricultural sector. For purposes of pricing and market distribution, agricultural products are officially classified into three categories according to their importance to the population. Official price figures exaggerate the improvement in agricultural prices and the extent of government support for agriculture.
