Agricultural Development Economics Division (ESA) Food and Agriculture Organization of the United Nations 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

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) Some key objectives of rice policies  Farmer income  Consumer welfare  Price stability  Self-sufficiency  Environment preservation

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) “Weights” for key objectives of rice policy Different countries have different objectives

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) Some key determinants of rice policy objectives  Level of economic development  Trade status (exporter or importer)  Country size (China, India)

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) Some key types of rice policies  Level of stocks  Trade controls

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) Different purposes for holding stocks  Working  Emergency  Buffer (price stabilization)  International stocks Level of stocks

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) 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 stocks

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) Different objectives of 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 Trade controls

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) Advantages and disadvantages  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 Higher prices/self-sufficiency

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) Advantages and disadvantages  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 Price stabilization

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) Different instruments to control trade  Laissez-faire, or free market  Control of trade using tariffs (P)  Control of trade using quantitative restrictions (Q) Trade controls

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) Advantages and disadvantages of free market policies  Greater short-run economic efficiency  Loss of control over a key political variable (the price of rice), potentially greater economic instability Trade controls

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) 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 controls

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) Advantages and disadvantages of policies that control quantities  Feeling of greater direct control  Greater uncertainty for private economic actors, prone to government policy errors Trade controls

Bangkok, Thailand 28 November Regional Office for Asia and the Pacific Food and Agriculture Organization of the United Nations Agricultural Development Economics Division (ESA) Thank you for your kind attention