Files
Abstract
Rice is the lifeline of almost 70% of the world's poor residing in Asia,
where more than 90% of world rice production and consumption takes place. Rice
trade liberalization therefore has tremendous implications for poverty. The world
rice market is highly distorted, partly because of the high degree of intervention in
rice markets across the world. While poor countries such as Thailand, Vietnam,
and India tend to "disprotect" rice sectors, the rich countries of East Asia (Japan
and Korea), Europe, and the United States heavily support their rice producers. As
a result, there is great diversity in domestic rice price levels, with very high prices
in the latter countries and very low prices in the former. Trade liberalization would
thus result in flows from these poorer Asian countries to East Asia and Europe.
This is predicted to have beneficial effects for poverty, through producer price
increases and second-round effects (wages, employment, and investment) in
exporting countries, and to augment short-term food security in poor importing
countries.
However, if rice trade liberalization is to contribute to poverty alleviation
in developing countries, there is a need to streamline distortionary agricultural
policies, particularly in developed countries. Also important are "behind the
border" reforms in developing countries aimed at reducing transactions costs for
farmers, rationalizing input pricing policies, ensuring access to risk management
institutions and safety nets, improving access to food, and combating adverse
environmental conditions. In the long run, rice trade liberalization might have to be coupled with initiatives to enhance agricultural productivity and rural economic
growth to be able to make a dent in poverty.