Regional Trade and Food Price Stablisation in South Asia: Policy Responses to the 2007-08 World Price Shocks

World price shocks and disruptions in international cereal trade in 2007 and 2008 caused considerable anxiety and hardship for food importing countries throughout the world. In South Asia, Pakistan, Afghanistan, Bangladesh and India were all affected by these movements in international prices, though the effects on domestic prices in each case was mitigated or exacerbated by each country’s own trade policies, as well as the trade policies of its neighbours. This paper reviews domestic and international trade policies in South Asia in recent years and argues that liberalised international trade still provides the best mechanism for stabilising prices and food supplies in most years. Nonetheless, appropriate contingency policies still are needed for years in which international prices are extraordinarily high. More explicit commitments to cereal trade liberalisation within South Asia would also promote region-wide food security and help avoid a repetition of export supply disruptions by India that contributed to sharp rises in food prices in Bangladesh, and similar restrictions by Pakistan that contributed to food price increases in Afghanistan.Food Security, Price Stabilisation, Trade Policy, Food Stocks, South Asia

Comparative advantage in Bangladesh crop production

"This study uses data from 1996/97 through 1998/99 to examine the relative efficiency of production of crops in Bangladesh and their comparative advantage in international trade as measured by net economic profitability (the profitability using economic, rather than financial costs and prices), and the domestic resource cost ratio, (the amount of value of non-tradable domestic resources used in production divided by the value of tradable products). The economic profitability analysis demonstrates that Bangladesh has a comparative advantage in domestic production of rice for import substitution. However, at the export parity price, economic profitability of rice is generally less than economic profitability of many non-rice crops, implying that Bangladesh has more profitable options other than production for rice export. Several non-cereal crops, including vegetables, potatoes and onions have financial and economic returns that are as high as or higher than those of High Yielding Variety (HYV) rice. The relatively minor role in cropping systems of these crops despite their higher returns, can largely be attributed to high price risks associated with marketing, suggesting the need for further development of agro-processing industries, rural infrastructure, and marketing networks." Authors' Abstract

Rice price stabilization in Bangladesh

To meet its overall objective of ensuring food security for all households, the Government of Bangladesh undertakes several activities: it intervenes in markets to stabilize prices, targets food distribution to poor households and provides emergency relief after natural disasters. This paper provides measures of the variability of domestic and international rice prices, and examines the mix of government intervention and private sector participation in rice markets. The analysis shows that the relatively high degree of price stability achieved in the 1990s was due in large part to private sector imports that stabilized markets following major production shortfalls. Domestic rice procurement contributed relatively little to raising domestic producer prices at harvest time, involved only a small percentage of farmers, and incurred excessive costs following successful harvests because of procurement prices set far in excess of market prices.Price regulation ,Food security South Asia ,Government policy ,Markets Prices ,Rice Bangladesh ,

Distortions to Agricultural Incentives in Pakistan

Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,

Rice Price Stabilization in Madagascar: Price and Welfare Implications of Variable Tariffs

Given the large share of major staples in the budgets of the poor, governments in many developing countries intervene in food markets to limit variation in the prices of staple foods. This paper examines the recent experience of Madagascar in stabilizing prices through international trade and the implications of adjustments in tariff rates. Using a partial equilibrium model, we quantify the overall costs and benefits of a change in import duties for various household groups, and compare this intervention to a policy of targeted food transfers or security stocks.Food Policy, Price Stabilization, Trade, sub-Saharan Africa, Crop Production/Industries, International Relations/Trade, Q11, Q17,

Implications of quality deterioration for public foodgrain stock management and consumers in Bangladesh

In the late 1990s, government policy in Bangladesh shifted in favor of increased public foodgrain stocks, setting official minimum stock targets of 1.0 to 1.2 million tons, as compared to operational targets of about 700 to 800 thousand metric tons in the early 1990s. Because no mechanism for stock rotation involving simultaneous buying and selling grain at a wholesale level exists, higher stock levels with no increase in distribution led to an increase in average age of stocks and problems of stock quality deterioration. This paper extends earlier analyses of stock policy by focusing on a key aspect of stock management in Bangladesh: the economic costs of stock quality deterioration in storage, including the implicit costs to recipients of Public Food Distribution System (PFDS) foodgrain. Using market prices to value procurement and distribution of rice and wheat, consumer and producer subsidies accounted for 57.4 and 20.9 percent, respectively, of net outlay in 2000/01. Implicit losses to rice consumers due to quality deterioration were significant in 2000/01: about 1.05 billion Taka (about 19 million dollars), equal to 10.9 percent of total net outlay on rice of the PFDS. Analysis of the costs and benefits of alternative stock targets based on calculations of the minimum age of stock on a monthly basis indicates that moderate increases in the size of stock (e.g. 200 thousand tons), lead to only small net marginal outlays. However, unless procurement and distribution are also raised, the age and quality of the stock for distribution deteriorates, resulting in significant losses to program recipients.Grain production ,Bangladesh ,Food supply ,

In-kind transfers and household food consumption

This paper examines the impact of wheat transfers and cash incomes on wheat consumption and wheat markets. Using propensity score- matching techniques, the total marginal propensity to consume (MPC) for wheat is, on average, 0.33, ranging from essentially zero for Food For Work (a program with large transfers) to 0.51 for Food For Education. Econometric estimates indicate that the MPC for small wheat transfers to poor households is approximately 0.25, while the MPC for wheat out of cash income is near zero. This increase in demand for wheat reduces the potential price effect of three major targeted programs involving small rations (Food For Education, Vulnerable Group Development, and Vulnerable Group Feeding) by about one-third.Transfer payments. ,Incomes. ,Wheat. ,Wheat Economic aspects Bangladesh. ,Food consumption. ,Cereal crops. ,Education. ,Labor. ,Access to education. ,

In-kind transfers and household food consumption

This paper examines the impact of wheat transfers and cash incomes on wheat consumption and wheat markets. Using propensity score- matching techniques, the total marginal propensity to consume (MPC) for wheat is, on average, 0.33, ranging from essentially zero for Food For Work (a program with large transfers) to 0.51 for Food For Education. Econometric estimates indicate that the MPC for small wheat transfers to poor households is approximately 0.25, while the MPC for wheat out of cash income is near zero. This increase in demand for wheat reduces the potential price effect of three major targeted programs involving small rations (Food For Education, Vulnerable Group Development, and Vulnerable Group Feeding) by about one-third.Transfer payments. ,Incomes. ,Wheat. ,Wheat Economic aspects Bangladesh. ,Food consumption. ,Cereal crops. ,Education. ,Labor. ,Access to education. ,

Transaction costs and agricultural productivity

This paper examines the mechanisms that transmit isolation into poverty in Madagascar using household survey data combined with a census of administrative communes. Given the importance of agriculture to the rural poor, where nine out of ten poor persons is engaged in farming, we concentrate on isolation manifesting itself in the form of high transaction costs such as the cost of transporting agricultural commodities to major market centers. We find that (a) the incidence of poverty in rural Madagascar increases with remoteness; (b) yields of major staple crops fall considerably as one gets farther away from major markets; (c) and the use of agricultural inputs declines with isolation. Simulation results using output from rice production function estimates suggest that halving travel time per kilometer on major highways (feeder roads) will increase primary season rice production by 1.3 (1.0) percent.Rural poor ,rural areas ,Rice production ,Poverty ,Household surveys Madagascar ,

Alternative Approaches for Moderating Food Insecurity and Price Volatility in Zambia.

• Maize production varies widely from year to year, given Zambia’s heavy dependence on rainfed cultivation. Thus consumers face wide swings in availability of their primary food staple. • Typical public responses include increased food aid inflows, government commercial imports and stock releases, and tight controls on private sector trade. While intended to improve domestic supply, these public responses can inadvertently exacerbate price instability and food insecurity for Zambian consumers. • Two key private sector responses – private cross-border maize trade and consumer substitution of alternate food staples (such as cassava) for maize - can also help to moderate food consumption volatility. • Together, private imports and increased cassava consumption could fill roughly two-thirds of the maize consumption shortfall facing vulnerable households during drought years. • But policy changes – including more open borders and greater transparency in public import and pricing decisions – will be required to induce the private sector to expand imports, storage and production of key staples and, in turn, improve food security for the poor consumers in Zambia.food security, food policy, Zambia, Food Security and Poverty, Q20,