Empirics of Agricultural Production: Comparison of Instrumental Variable and Two Stage Least Square Approach

The world is in the midst of a food crisis. The UN Chief Mr. Ban has rightly opined that the steeply rising price of food has developed into a real global crisis. Local manifestations in the shape of food riots and political protests should not obscure the global cause of the problem. Soaring food prices have created inflationary risks not seen in years. Food prices have risen 83 per cent in the last three years, bio-fuels accounting for a 30 per cent price hike. One hundred million live are endangered and 30 million have been dragged down into poverty by bio-fuel prices. Agricultural economists say that unless and until aggressive farm reforms are initiated in developing nations, especially emerging countries, the crisis could get much worse. But the future looks food with better prospects. India may lift restrictions on wheat and rice exports. Good output of rice is expected from India, Thailand and Vietnam. Bumper wheat output from India, Australia, the US and Canada. The United Nations must take immediate action in a concerted manner. Hence, there has been an urgent need to evolve a sound and effective strategy to over come the crisis.