The world rice market was aflame in spring 2008, and for several months it looked as if the trading edifice that had exhibited such resilience over the last two decades was going to burn to the ground. World prices trebled within less than four months and reached a 30-year, inflation-adjusted high. Many market observers thought the previous record set in 1974 would soon be toast.
The governments in India, Vietnam, and the Philippines did not purposefully set the world market on fire, but the unintended result of their actions threatened both innocent bystanders (low-income rice importers as far away as Africa and Latin America) and, ultimately, poor rice consumers at home.
This paper describes what sparked the fire and the accelerants that made a bad situation nearly catastrophic. It remains to be seen, however, if the trading edifice has been seriously undermined by the actions of decision makers in several key Asian rice-exporting and -importing countries. In describing the cascading negative effects of these seemingly rational domestic policies, this paper aims to help policymakers in these nations to avoid a repeat of the disastrous price spike of 2008.