ABSTRACT
Among agricultural economists it has become almost a cliche to note that government interventions in food markets on a large scale are a complex, costly, and pervasive practice in developing countries. The accepted attitude in many developing countries of governments playing a very paternalistic role in everyday economic life creates a favorable climate for many kinds of intervention in food markets. Economists are concerned about government interventions in markets because of the misallocation of resources that results from such actions. The number of policy instruments used in agriculture in developing countries is vast, being limited only by human ingenuity. In some countries agriculture is receiving overcompensation for overvalued exchange rates while in others exchange rates are actually undervalued, providing agriculture with an implicit subsidy. At high levels of development, such as in the industrial countries, agriculture is generally subsidized, resulting in overproduction and underconsumption.
