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Rice Trade and Price Volatility: Implications on ASEAN and Global Food Security

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Author Info

  • Clarete, Ramon

    (University of the Philippines)

  • Adriano, Lourdes

    (Asian Development Bank)

  • Esteban, Amelia

    (University of British Columbia)

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    Abstract

    This paper highlights the thinness of rice trade relative to wheat and maize, and the contrasting price volatility and tradability relations for wheat and maize, which display a positive correlation, and for rice, which show an inverse relation. The paper focuses on Southeast Asia, which hosts the world’s biggest rice exporters and rice importers. Using the Granger causality tests to determine correlation, the analysis concludes that very low global trading activity in rice that tends to self-perpetuate its dampening effect on trade does not cause extreme rice price volatility in the region, but the other way around. Rice-importing countries appear to resort to self-sufficiency measures as insurance to compensate for the high risks of unreliable rice supply and unaffordable rice prices. What would it take for countries to regain their confidence in external rice trade? The Association of Southeast Asian Nations Integrated Food Security Program provides a menu of policies for reducing and managing the chances of excessive rice price volatility.

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    File URL: http://www.adb.org/sites/default/files/pub/2013/ewp-368.pdf
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    Bibliographic Info

    Paper provided by Asian Development Bank in its series ADB Economics Working Paper Series with number 368.

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    Length: 33 pages
    Date of creation: 02 Sep 2013
    Date of revision:
    Handle: RePEc:ris:adbewp:0368

    Note: http://www.adb.org/sites/default/files/pub/2013/ewp-368.pdf
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    Related research

    Keywords: ASEAN cereal trade; ASEAN food security; ASEAN rice trade; rice price volatility; rice self-sufficiency programs; rice trade;

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    1. Sushil Bikhchandani & Sunil Sharma, 2001. "Herd Behavior in Financial Markets," IMF Staff Papers, Palgrave Macmillan, vol. 47(3), pages 1.
    2. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August.
    3. Bollerslev, Tim, 1986. "Generalized autoregressive conditional heteroskedasticity," Journal of Econometrics, Elsevier, vol. 31(3), pages 307-327, April.
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