Government Procurement Impact on Farmers' Livelihoods

Large-scale procurement, often funded through unsustainable commercial borrowing with high interest rates, is a common practice in many countries. This procurement is typically justified in the name of supporting smallholders or ensuring national food security. A key example of this is when the announced wheat support price surpasses the international price, as seen in 2024.

One pressing question that arises from this practice is the potential consequences for farmers if the government fails to announce a support price and international prices remain low. Farmers heavily rely on these support prices to sustain their livelihoods and maintain their agricultural operations.

Without a support price in place and with low international prices, farmers may face significant challenges. They might struggle to cover their production costs, leading to financial instability and potential loss of income. This situation could also impact food security at a national level, as farmers may reduce their production or even abandon farming altogether.

The issue of large-scale procurement and support prices is crucial for the agricultural sector and the livelihoods of farmers. It is essential for governments to carefully consider the implications of their procurement strategies on smallholders and national food security. Sustainable and well-thought-out policies are needed to ensure the long-term prosperity of farmers and the stability of the agricultural sector.