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 ID: 221175
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National rice policies in Asia
David DaweAgricultural Development Economics Division and Regional Office for Asia and the Pacific, FAOBangkok, Thailand, 28 November 2013Slide2
Some key objectives of rice policies
Farmer incomeConsumer welfarePrice stability
Self-sufficiency
Environment preservationSlide3
“Weights” for key objectives of rice policy
Different countries have different objectivesSlide4
Some key determinants of rice policy objectives
Level of economic developmentTrade status (exporter or importer)Country size (China, India)Slide5
Some key types of rice policies
Level of stocksTrade controlsSlide6
Different purposes for holding
stocksWorkingEmergency
Buffer (price stabilization)International stocks
Level of stocksSlide7
Advantages and disadvantages
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
Level of stocksSlide8
Different objectives of trade controls
Change the average level of pricesChange the volatility of prices
But any instruments used to affect one will usually affect the other as well
Trade controlsSlide9
Advantages and disadvantages
Less exposure to world markets, greater income for farmers, increased incentives for raising productivityMore poverty (especially in importers), worse nutrition, impede crop diversification, higher wages that reduce
industrial competitiveness, more wheat imports, efficiency losses
Higher prices/self-sufficiencySlide10
Advantages and disadvantages
Greater macro and political stability, lower likelihood of farmers and poor consumers falling into poverty trapsCan be expensive to operate, especially if government procurement is a large share of domestic production
Price stabilizationSlide11
Different instruments to control trade
Laissez-faire, or free marketControl of trade using tariffs (P)
Control of trade using quantitative restrictions (Q)
Trade controlsSlide12
Advantages and disadvantages of free market policies
Greater short-run economic efficiencyLoss of control over a key political variable (the price of rice), potentially greater economic instability
Trade controlsSlide13
Advantages and disadvantages of tariff-based policies
Potential for less uncertainty for traders, consumers & producers (especially if a schedule is used)Feeling of less control, tariff schedules are illegal under WTO
Trade controlsSlide14
Advantages and disadvantages of policies that control quantities
Feeling of greater direct controlGreater uncertainty for private economic actors,
prone to government policy errors
Trade controlsSlide15
Thank you for your kind attention