Rice price stabilization in Bangladesh: Assessing the impact of public farm-gate and consumer price stabilization policy instruments on the overall grain market and developing policy orientations with a greater role for the private sector

Rice price stabilization in Bangladesh: Assessing the impact of public farm-gate and consumer price stabilization policy instruments on the overall grain market and developing policy orientations with a greater role for the private sector
Author: Minot, Nicholas
Publisher: Intl Food Policy Res Inst
Total Pages: 94
Release: 2021-09-01
Genre: Political Science
ISBN:

Price instability is a fact of life. In a market economy, domestic prices change in response to changes in supply, consumer preferences, policy, world prices, and other factors. Crop prices tend to be particularly volatile because harvests occur only once or a few times per year and because the size of the harvest varies due to weather, prices, and other factors. For internationally-traded commodities, volatility in world prices can be another source of instability in domestic prices.

Assessing the impact of rice price stabilization policies in Bangladesh: Results from a stochastic spatial equilibrium model

Assessing the impact of rice price stabilization policies in Bangladesh: Results from a stochastic spatial equilibrium model
Author: Minot, Nicholas
Publisher: Intl Food Policy Res Inst
Total Pages: 51
Release: 2024-05-13
Genre: Political Science
ISBN:

Rice plays a central role in the diet in Bangladesh and as a source of income for farmers. Although Bangladesh has largely liberalized international trade in rice, it maintains a public food distribution system to stablize prices, distributing an average of 2 million tons of rice per year at a cost of almost US$ 800 million per year. This study explores whether alternative policies could achieve similar stabilization at a lower cost. It uses a stochastic spatial-equilibrium model of rice markets to simulate monthly prices in eight regions of the country. Stochastic shocks are used to simulate fluctuations in regional production, replicating historical patterns at the region-season level, as well as inter-regional correlation in production shocks. It also simulates fluctuation in world rice prices, mimicking the mean, variance, and serial correlation of historical wholesale prices of rice in Delhi. Public procurement and distribution follow historic averages by month and region. Private storage is represented by a simplified version of rational expectations models, in which net storage is a non-linear function of availability in the previous month. One set of simulations tests alternative levels of distribution, finding that cutting distribution to 1 million tons would have minimal effects on the level of rice price stability. Another set of simulations tested different import tariff levels, including the baseline rate of 25%1. We find that lower tariffs result in both lower rice prices and less price instability, as world rice prices tend to be more stable than local prices. Simulating a buffer stock with different price bands shows that a narrow band can achieve high price stability but at a high fiscal cost. A 20 T/kg (USD 0.26/kg) price band generates similar price stabilization at a lower cost compared to current policy. However, it is difficult to set the “right” purchase and sale price, and many simulations result in exhausting reserves or reaching warehouse capacity. An adaptive buffer stock, in which the price is adjusted as the stock runs too low or too high, solves some of these problems. In general, the study finds that current procurement and distribution patterns do not match well with the regional and monthly patterns of surplus and deficit, possibly reflecting multiple and conflicting goals of the public food distribution system.

Agricultural Policy Monitoring and Evaluation 2020

Agricultural Policy Monitoring and Evaluation 2020
Author: OECD
Publisher: OECD Publishing
Total Pages: 508
Release: 2020-06-30
Genre:
ISBN: 9264748210

This annual report monitors and evaluates agricultural policies spanning all six continents, including the 36 OECD countries, the five non-OECD EU Member States, and 13 emerging economies.

Managing Risk in Agriculture A Holistic Approach

Managing Risk in Agriculture A Holistic Approach
Author: OECD
Publisher: OECD Publishing
Total Pages: 172
Release: 2009-09-18
Genre:
ISBN: 9264075313

This book examines the current magnitude and characteristics of risk-related policies in agriculture and what is known about the quantitative size of agricultural risks. It also looks at the on-farm, off-farm, and market instruments available to manage risk.

Agricultural Policy Monitoring and Evaluation 2022 Reforming Agricultural Policies for Climate Change Mitigation

Agricultural Policy Monitoring and Evaluation 2022 Reforming Agricultural Policies for Climate Change Mitigation
Author: OECD
Publisher: OECD Publishing
Total Pages: 652
Release: 2022-06-23
Genre:
ISBN: 9264493867

This annual report monitors and evaluates agricultural policies in 54 countries, including the 38 OECD countries, the five non-OECD EU Member States, and 11 emerging economies. It finds that the continued rise in agricultural support has been slower than sector growth in recent years, but has been driven to record highs mainly by temporary factors.