About half the world depend on rice as their staple food. Yet, only about 5 to 7 percent of the world’s rice production is traded across borders, low for an agricultural commodity, and this percentage is likely to go down. Recently, countries like India, Indonesia, Vietnam, China, Cambodia and Egypt have cut back on rice exports. This seems reasonable because a country may wish to keep the food for themselves.
However, Tyler Cowen, Professor of Economics at George Mason University, argues that restricting rice trade around the world has the long term effect of not increasing supply to match demand.
Export restrictions send a message to farmers that their crops are least profitable precisely when they are most needed. There is little incentive to plant, harvest or store enough rice — or any other crop, for that matter — as a hedge against bad times.
If farmers can get a market price for their rice, they are likely to increase their profits and want to grow more, thus easing the rice shortage. Keeping rice within their countries, dampens the rise in price, and so there is less incentive for a farmer to produce more.
Export restrictions treat rice trade and production as a zero- or negative-sum game where one country’s gain comes at the expense of another. That’s hardly the best way to move forward in a rapidly growing world economy.
A restricted market in rice would "slow the speed of adjustment to changing global conditions."
That may be a compelling argument for easing the restrictions on the rice trade around the world. But, if rice is exported from producer countries, it’s likely to leave less for their own population. Governments would have to make up for this, or some of their population will go hungry.
Andrew Leonard, in Salon.com,
You can’t just wave your hand and declare in the New York Times that the answer to high rice prices is to get rid of all export restrictions, without at the same time providing for some kind of short-term cushion to the millions of people who will be harmed by such a policy today or tomorrow. [..] The great irony that bedevils free trade is that to make it work will require the kind of global attention to winners and losers that might only be possible through a functioning world government that treated all the citizens of the planet as its constituency.
1 response so far ↓
1 jimstark // Apr 30, 2008 at 1:44 am
I’m no expert on rice or any other human difficulties that require the establishment of a world government, but to answer your question above, about ten years, according to my new book, “Rescue Plan For Planet Earth; Democratic World Government through a Global Referendum,” which will be published in September of 2008. Advance copies are available at www.rescueplanforplanetearth.com, and three free chapters are posted there. Please don’t write me off as yet another dreamer before you check out the plan. This can and should happen.
Cheers,
Jim Stark
jimstark@webruler.com
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