Abstract:
The deregulation of agricultural markets and its scope for benefits to farmers are examined using the system generalised method of moments to estimate India’s supply equations of sugar and sugarcane. An alternative theoretical framework is used to generate the supply equations—different from Nerlove’s Adaptive Expectations-based supply response function or the assumption of profit-maximising firms operating in a freely competitive market—which fits into the sugar sector’s regulatory system in India. The findings suggest that the proposed deregulations will not reduce the sugar sector’s cyclicality nor will it create a win-win situation for farmers and mills. Instead, the mills will benefit at the cost of farmers.