MARKETS AND STATES IN TROPICAL AMERICA

With regards to farming/agriculture, "why should reasonable men adopt public policies that have harmful consequences for the societies they govern?"

In describing the agricultural policies of African states, we therefore examine government intervention in three markets: the markets for agricultural commodities, the markets for inputs into farming, and the markets for the goods that farmers buy from the urban-industrial sector.

Basic Tenets of African Governments

• Governments wants to stay in power, the must appease powerful interests. Political action is used to secure special advantages - rewards that cannot be secured by competing in the market.
• Governments finance production programs over pricing policies to promote superior political attractions. Such programs fail because the resources are spread too thin.

Policies Toward Cash Crops for Export

• Most African states possess publicly sanctioned monopsonies (a single buyer); where there are many sellers but only one buyer.
• In Africa, public agencies are by law sanctioned to serve as sole buyers of major agricultural exports. They purchase cash crops for export at administratively determined domestic prices, and then sell them at the prevailing world market prices.
• During economic crisis, these agencies kept the price paid to farmers below the price set by the world market; becoming the wealthiest and economically most significant single units in their respective economies.

Semper Fi