Introduction

– Government policies on agribusiness enterprises is the goals and methods used to bring desirable change in socioeconomic variables.

– The government intervenes in many markets, even markets which are highly competitive. – – The interventions can take a number of forms:

a) The control of prices: Fixing prices, either above or below the free-market equilibrium,

b) Taxation: Taxing of production or sale of various goods.

c) Subsidies: Subsidizing the production or sale of various goods

d) Buffer Stock: Taking over production

e) Regulation: Various laws could be passed to regulate the behavior of firms.

Why intervene?

1. Agricultural prices are subject to considerable fluctuation (risk and uncertainty, lack of long term investment plan, cobweb theory of supply, etc.).

2. Farm incomes rise less likely over time than other incomes.
3. The lack of economic power of farmers.
4. Traditional rural ways of live may be destroyed.
5. Completion from abroad (cheap food imports from abroad).

Objectives of the government intervention:

1) To reduce price and income instability

2) To improve resource allocation pattern

3) To make the nation self sufficient in food and fibers and ultimately in export of goods

4) To raise the general economic standard of people

5) To provide guide for the producers of goods and services