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Abstract

This paper discusses the situation of irrigated sorghum and wheat with respect to their financial and economic profitability and international competitiveness in use of domestic resources, in light of declared government policy which emphasizes shifting from traditional rainfed sector to irrigated sector for production of staple foodgrain. Domestic resource cost analysis has been employed using official and shadow exchange rates. Measures of domestic resource cost ratio, international value added, international competitiveness, nominal and effective protection coefficients were also estimated. Results indicate that the economic profitability has been significantly higher than the financial one due mainly to variability in international prices, yields and overvalued exchange rates; but devaluation of the currency is not a sufficient condition for paying higher prices to farmers.

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