Date Published:
Jul 30, 2014
Policy Notes
Focus Area(s):
PN 2014-08

The rice price spike experienced in the third quarter of 2013 alarmed the public. Speculations spread about the cause of the spike, the most popular of which was the hoarding by private traders. Rice cartels were also blamed for price manipulation. These cartels were perceived to connive with rice smugglers in an unholy alliance.

It is easy to blame rice traders and smugglers for price manipulation, but it is another thing to produce evidence for this accusation. This Policy Note is the outcome of a study on the actual state of rice supply in the country. It looks into the rice price spike in 2013 by taking a different approach instead of subscribing to the notion of secret conspiracies. The alternative explanation taken by the study invokes nothing more than standard supply and demand. It proposes that the inadequacy of supply starting from mid-2013 can be attributed to the reduction in imports due to government policy. Such reduction was neither compensated for by a commensurate increase in domestic production nor by a timely release from the buffer stock.

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