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The policy response to the problem of diminished agricultural growth came in the early 1970's. Given the measures taken, ex-post it can be seen that from the government's perspective, the problem of agriculture was a problem of food supply, particularly of basic grains. Policies were implemented to increase food supply and incomes in the rural areas while at the same time **maintaining** the **same institutional and** land tenure structure. **The** policy response had many elements, chief among them: (i) an attempt to increase prices for basic crops, (ii) massive infusion of public credit, (iii) a special campaign to increase production of beans and corn, (iv) the formation of collectivized ejidos, (v) strong emphasis on specializing pro-action patterns along food self-sufficiency lines regardless of international prices, and (vi) provision of additional subsidies to inputs like fertilizers and electricity (cf. World Bank (1989a), (1990b)). These policies have been costly in terms of subsidies to fertilizers, agricultural credit, electricity, crop insurance and price supports<sup>66</sup> , and have probably provide~d large rents to higher income producers<sup>67</sup> . Unfortunately, they have been unable to produce 6 6 he World Bank (1989a, Vol. 1, p. vii) estimates that untargeted subsidies to agricultural financial institutions and agricultural inputs totalled US 2.4 billion in 1988. The report also notes that these subsidies "..total about 10 times the public investment in the sector. Simply reducing the losses of the financial institutions could double the total public investment in the agricultural sector" (p. 8).

67 The evidence on rents is patchy, but plausible. With respect to fertilizers Yates (op. cit., p. 212) claims that "..the fertilizer subsidy chiefly assists those who ordinarily use large quantities of fertilizer, which in practice particularly means farmers in the irrigation districts, but it does nothing for the subsistence cultivator in the mountains of Oaxaca." With respect to credit see footnote 54. With respect to water Yates notes that "It seems puzzling that successive governments pursued this policy of subsidizing irrigation water, to the benefit of what is after all the richest section of the farming community." (p. 81). With respect to marketing Reath notes that "..the marketing subsidy manifests the same contradictions **as** subsidized credit programmes: it was initially designed to benefit the poorest producers but has ended up providing an unnecessary cushion to commercial-scale prolucers and wholesalers.." (1990, p. 44). With respect to price supports, an argument that they are also regressive can be made along Ricardian-rents lines, since the price support affects a crop grown on lands of very different productivity and a larger share of marginal lands is cwned by the poorer **rural** producers: "Horecver, the use of price supports for maintenance of income may work fairly well in a country where the gap is not too great between the higher and the lower income farmers, but in a developing country where half the farm population operates on a subsistence basis, redistributive objectives cannot be obtained in this way. A corn price which is barely adequate for a poor peasant in Oaxaca spells riches to an irrigation farmer in Guanajuato" Yates, op. cit., p. 233.