Agricultural input market reforms

The objective of this paper is to derive lessons from selected literature concerning the impact and the conditions of successful agricultural input market reform. The agricultural inputs of interest in this review are: fertilizers, seeds, agricultural equipment, pesticides, and livestock services and health inputs. The paper examines the rationale for market reform, its impact on growth, productivity, and income of farmers, and the conditions for success. Six main conclusions emerge from this review. First, market structures are the result of evolutionary processes that accompany the adoption and the diffusion of modern technology in agriculture. Second, the development of markets and private sector cannot occur unless an adequate infrastructure is in place. Third, markets cannot work unless a favorable institutional environment is created. Fourth, the success of reforms is heavily influenced by the sequencing of various policy measures. Fifth, the participation of the private sector is dependent on the credibility of government policies in support of market reforms. Finally, the scanty evidence on the impact of market reforms on small farmers suggests that these groups are often penalized.