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Abstract

U.S. rice policy is evaluated in this paper with a global modeling framework to examine the potential impacts of domestic policy reforms using stochastic analysis. Results of this study show that without government payments, the international rice price and U.S. farm price and their volatility will increase. For the U.S., rice area harvested, production, net exports, and the country’s share in global net exports will decrease under a no-government-payment scenario. Analysis of trade of major exporting and importing countries indicates that volatility of international trade also increases under the same scenario. While unilateral elimination of government support for U.S. rice results in a decline in world net rice trade as a result of decreased purchases by major rice importers, the major rice net exporter competitors increase their share at the expense of the U.S. The stochastic analysis provides market insights as it shows how outcomes are empirically-distributed as opposed to the incomplete picture provided by point estimates generated by deterministic analysis.

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