Policy Responses to 2008 High Food Prices: Domestic Incentives and Global Implications
Global food commodity price inflation beginning in 2006 and continuing through mid-2008 became a priority concern for global consumers, producers and policy-makers alike. In response, many governments across the world implemented policies targeting high food commodity prices in their domestic markets. These policy responses were concentrated in lower income countries and primarily targeted rice and wheat. The 2007-08 policy responses across countries included liberalized import tariffs, export restrictions and increased domestic support for both consumers and producers. We develop a case study of 15 major global trading, lower-income countries’ policy responses . The analysis addressed the following questions: a) What policy responses did major global traders with relatively large domestic food commodity price vulnerabilities choose?; b) What are the expected short-term and potential longer-term market impacts of these policies?; c) What domestic incentives exist for the selected countries’ policy choices?; and d) Did the response policies work? History may repeat itself in the face of future global price surges unless sufficient feedback is received from trading partners. Looking at India’s and Vietnam’s experience, it appears that short-term goals associated with the rice export bans were achieved, both in terms of perceived mitigation of domestic prices and political objectives. Without tangible consequences, market disrupting policies could be expected in the future if the domestic incentives within relevant countries persist.
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