It is always a little unsettling when the government involves itself in the production of goods and services; gross inefficiencies, rent seeking behavior, etc. come to mind. In this case the government has decided to support the dairy production. The article states that “[a]ccording to dairy companies, more than 300,000 farmers across the country supply around 500,000 liters of milk every day. The daily demand for milk hovers around 800,000 liters a day.” If this is true, shouldn’t the price of milk sky rocket?—that’s a shortage of about 40%! Also, to fill such a shortage why aren’t the private producers increasing production? The plan, as the article points out will provide “different incentives like free distribution of semen of improved varieties of cows to boost milk production at lower cost.” Isn’t a 40 % shortage in the market enough of an incentive?
Dear Jetha Arthabid,
ReplyDeleteGlad to read your view. Classic case of Market Failure! Now, with this I see a multi million dollar project of Value Chain of Business Inclusive and Pro-poor structure. Free distribution of semen wont solve anything, what farmers need are: access to credit, information and training.