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. This paper aims to help policymakers in the rice-exporting and -importing nations to avoid a repeat of the disastrous price spike of 2008.
In this essay, CGD post-doctoral fellow Jenny Aker analyzes the performance of grain markets in Niger during its 2005 food crisis, when an estimated 2.4 million people were affected by severe food shortages, to find ways to avoid future crises. She finds that local grain markets are highly responsive to national and sub-regional price shocks and suggests that local early-warning systems should monitor the impact of drought and prices in key national and sub-regional markets. This essay highlights the need for policies that account for the impact of local purchases and regional trade on food security.
The loss of rice production in Myanmar is worsening the crisis in world rice markets, where prices have trebled this year. Meanwhile, Japan has 1.5 million tons of surplus rice, most of it imported from the U.S. Releasing this rice to global markets would prick a speculative bubble and bring rice prices down fast, while also encouraging China and Thailand to release their surplus stocks. But first Washington must lift its objections and Japan must decide to re-export rice that it imported from the U.S., Thailand, and Vietnam. Failure to act would mean that high-quality U.S. rice would be fed to Japanese pigs and chickens while millions of poor people suffer from hunger and malnutrition. Tom Slayton, a former editor of The Rice Trader, and Peter Timmer, CGD non-resident fellow and visiting professor at Stanford University, explain how prompt action could prevent the rice price crisis from becoming a hunger crisis.
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