Price stabilization is one of the most important objectives of agricultural policy.
Different methods of price stabilization (buffer stocks, floor-ceiling prices, buffer
funds, export/import taxes and subsidies) can be observed in their purest form in
developing countries. The most important lesson from the experiences of developing
countries for transforming Eastern-European agricultural systems is that, given an
underdeveloped system of agricultural trade and finance, market-building by the state
cannot be restricted to creating legal frameworks. The government can regulate efficiently
only well-functioning markets.
