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National rice policies in Asia

National rice policies in Asia. David Dawe Agricultural Development Economics Division and Regional Office for Asia and the Pacific, FAO Bangkok, Thailand, 28 November 2013. Some key objectives of rice policies. Farmer income Consumer welfare Price stability Self-sufficiency

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National rice policies in Asia

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  1. National rice policies in Asia David Dawe Agricultural Development Economics Division and Regional Office for Asia and the Pacific, FAO Bangkok, Thailand, 28 November 2013

  2. Some key objectives of rice policies • Farmer income • Consumer welfare • Price stability • Self-sufficiency • Environment preservation

  3. Different countries have different objectives “Weights” for key objectives of rice policy

  4. Some key determinants of rice policy objectives • Level of economic development • Trade status (exporter or importer) • Country size (China, India)

  5. Some key types of rice policies • Level of stocks • Trade controls

  6. Different purposes for holding stocks Level of stocks • Working • Emergency • Buffer (price stabilization) • International stocks

  7. Advantages and disadvantages Level of stocks • Enhanced food security (e.g. food for work, disaster relief, protection against domestic production shocks, world price spikes and delays in arrival of imports) • Interest costs, quality deterioration

  8. Different objectives of trade controls Trade controls • Change the average level of prices • Change the volatility of prices • But any instruments used to affect one will usually affect the other as well

  9. Advantages and disadvantages Higher prices/self-sufficiency • Less exposure to world markets, greater income for farmers, increased incentives for raising productivity • More poverty (especially in importers), worse nutrition, impede crop diversification, higher wages that reduce industrial competitiveness, more wheat imports, efficiency losses

  10. Advantages and disadvantages Price stabilization • Greater macro and political stability, lower likelihood of farmers and poor consumers falling into poverty traps • Can be expensive to operate, especially if government procurement is a large share of domestic production

  11. Different instruments to control trade Trade controls • Laissez-faire, or free market • Control of trade using tariffs (P) • Control of trade using quantitative restrictions (Q)

  12. Advantages and disadvantages of free market policies Trade controls • Greater short-run economic efficiency • Loss of control over a key political variable (the price of rice), potentially greater economic instability

  13. Advantages and disadvantages of tariff-based policies Trade controls • Potential for less uncertainty for traders, consumers & producers (especially if a schedule is used) • Feeling of less control, tariff schedules are illegal under WTO

  14. Advantages and disadvantages of policies that control quantities Trade controls • Feeling of greater direct control • Greater uncertainty for private economic actors, prone to government policy errors

  15. Thank you for your kind attention

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