Marketed Surplus Function of Major Agricultural Commodities in Pakistan

The marketed surplus of agricultural commodities plays a significant role in the economic development of a low-income country where agriculture is the principal source of income. This surplus is the main source of capital accumulation, since it provides the basic wage goods to the urban sector. A rise in the marketed surplus makes the terms of trade favourable to the urban sector which enables it to enhance the size of its profits. This, in turn, helps the rapid growth of the economy. The marketed surplus not only provides the nonagricultural sector with food, but also enables it to get raw materials, liquid capital and foreign exchange. It reduces the need for importing food stuffs and thus relieves pressures on the balance of payments. The role of marketed surplus in economic development is so well known that further elaboration is superfluous. Given the present high rate of population growth of now estimated at 2.7 per cent [16] and the rate of increase in per capita income it is unlikely that the marketed surplus of agricultural commodities has kept pace with the growing demand. Attempts are being made to raise the productivity of agriculture. Productivity, though of prime importance, is not the only factor that determines the size of the surplus. The marketed surplus is determined by the interplay of different independent economic variables. Unless the pattern of behaviour of these variables is known any policy aimed at raising the size of the surplus may be ineffective. Therefore, the need for a study of the marketed surplus function becomes important.