Off and on there have been discussions in this and other blogs( for example, http://www.shivamvij.com/ and otherindia.org) about the effects of globalization on Indian farmers. It emerged from the discussions that Indian Govt., various state governments, regional rivalries, spurious seeds and greedy merchants are at least partly to blame. But there was no clear discussion of how prices are fixed. I keep seeing various reports like the following that indicate globalization has effect on prices. From http://www.flonnet.com/stories/20061229004911600.htm:
"Why are cotton prices falling?
Since 1994, international prices have fallen and domestic prices reflect this depression. It was $1.10 for one pound of cotton in 1994 [Rs.2,500 a quintal]. It fell to 40 cents a pound. Today, it is 54 cents a pound [Rs.1,800 a quintal]. Between 1997 and 2003, we imported 110 lakh bales of cotton. The import tariff is only 10 per cent. Textile mills that export yarn do not even have to pay this tariff.
Our political leaders say farmers should compete in the free market and not rely on the government. But, it is not a free market. The prices in the international market are low right now because contries like the U.S. and China give subsidies to their cotton farmers. In the U.S., 20,000 cotton farmers get $4.7 billion in subsidies. China gives Rs. 900 a quintal to its farmers, that is, half the price. How can our farmers compete? That is why they are committing suicide.
Our government should at least intervene to ensure that the prices of cotton lint do not fall below Rs. 80 a kg. Then farmers will be assured of a price of Rs.2,700 to Rs.3,000 a quintal. It does not implement this policy because it is under pressure from the mill lobby, which imports cheap, subsidised cotton."
See also http://alternativeperspective.blogspot.com/2006/12/hidden-hand-of-free-market-corporate.html and two earlier posts of Madhukar Shukla mentioned in the article. Again, this is all for my own reference since earlier there was a query as to how American subsidies can affect prices in India.