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CAUSES OF THE CRISIS 45


Figure 2.15 Effects of export restrictions on rice prices Nominal rice price (U.S. dollars/metric ton)


900


700 800


500 600


400 300 200


100


Nigeria scraps 100% tariffs and imports 0.5 million metric tons of Thai rice


India, Vietnam, and Cambodia place full bans on exports and new Thai government discusses possibility of ban


Jan-Mar: Saudi imports from Thailand rise by nearly 90% after India’s ban


Egypt restricts exports


Jan-Apr: Philippines buys normal annual quota in just 4 months, including government-to-government deal with Vietnam


Vietnam and India place partial restrictions on exports


Drought causes Iran to order 0.8 million metric tons of Thai rice


Japan allowed to re-export rice stocks, dollar strengthens, oil and other crop prices fall


Cambodia removes ban Egypt announces


re-export of rice from Sep


India lifts export ban on some higher quality varieties


Strong demand from energy exporters keeps rice prices 25–30% above 2007 levels


Source: Headey (2010), based on the collation of various media articles and USDA Foreign Agricultural Service reports. Price is for Thailand A1 variety.


Note:


to the Philippines, although it was later reported that Japanese rice stocks were never actually released to developing Asian markets (Nakamoto and Landingin 2008).12 Whether this information had an effect is difficult to tell —at the same time oil prices also plummeted, as did other commodity prices, while the U.S. dollar also strengthened. In any event the rice bubble burst in June 2008, and rice prices fell precipitously.


The size of these trade shocks can be discerned by comparing annual changes in exports and imports from leading market actors in the rice mar- ket. Figures 2.16 and 2.17 show that 2007/08 saw major reductions in Indian and Vietnamese exports and surges in imports from Bangladesh, Philippines, and energy-exporting countries flush with foreign reserves. Incorporating these shocks into some back-of-the-envelope calculations based on short-run supply and demand elasticities, Headey (2010) calculates that export restric-


12 This information is anecdotal, but certainly USDA data do not indicate any increase in Japa- nese rice exports.


Jan 2007 Mar 2007 May 2007 Jul 2007 Jan 2008 Mar 2008 May 2008 Jul 2008 Jan 2009 Mar 2009 May 2009


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