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Rice Crisis Forensics: How Asian Governments Carelessly Set the World Rice Market on Fire

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  • Tom Slayton

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    Abstract

    The world rice market was aflame last spring and for several months it looked as if the trading edifice that had exhibited such resilience over the last two decades was going to burn to the ground. World prices trebled within less than four months and reached a 30-year inflation-adjusted high. Many market observers thought the previous record set in 1974 would soon be toast. The fire was man-made, not the result of natural developments. While the governments in India, Vietnam, and the Philippines did not to set the world market on fire, that was the unintended result of their actions which threatened both innocent bystanders (low-income rice importers as far away as Africa and Latin America) and, ultimately, poor rice consumers at home. This paper describes what sparked the fire and the accelerants that made a bad situation nearly catastrophic. Fortuitously, when the flames were raging at peak intensity, rain clouds appeared, the winds [market psychology] shifted, and conditions on the ground improved, allowing the fire to die down. It remains to be seen, however, if the trading edifice has been seriously undermined by the actions of decision makers in several key Asian rice exporting and importing countries. In describing the cascading negative effects of these seemingly rational domestic policies, this paper aims to help policy makers in the rice exporting and importing nations to avoid a repeat of the disastrous price spike of 2008.

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    File URL: http://www.cgdev.org/content/publications/detail/1421260
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    Bibliographic Info

    Paper provided by Center for Global Development in its series Working Papers with number 163.

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    Length: 43 pages
    Date of creation: Mar 2009
    Date of revision:
    Handle: RePEc:cgd:wpaper:163

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    Web page: http://www.cgdev.org

    Related research

    Keywords: rice; inflation; prices;

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    Cited by:
    1. L. Christiaensen, 2009. "Revisiting the Global Food Architecture. Lessons from the 2008 Food Crisis," Review of Business and Economic Literature, Intersentia, vol. 54(3), pages 345-362, September.
    2. John Gibson & Bonggeun Kim, 2011. "Quality, Quantity and Nutritional Impact of Rice Price Changes in Vietnam," Working Papers in Economics 11/16, University of Waikato, Department of Economics.

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