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  • Essay / Rice Production Essay - 1855

    BackgroundIndia is one of the largest producers and exporters of rice in the world, despite the fact that it consumes 95% of the rice it produces. Rice prices are therefore a major determinant of the welfare of not only consumers, but also producers in India. Given that rice also forms the staple diet of more than half the world's population, its supply and price have a major impact on food security, a hotly debated topic in India and elsewhere. In 2007-08, the world experienced a major food crisis, with prices of four major agricultural commodities – wheat, corn, soybeans and rice – reaching record levels. From January 2006 to October 2007, world prices of corn and wheat more than doubled, while from November 2007 to April 2008, world prices of rice tripled. This can be seen in the graph below: Note: Values ​​used are those of the nominal Thai price (used as an industry benchmark), with 5% broken milled white rice. By the end of December 2007, world rice prices had increased by 10% in just 2 months. Rice prices in the United States and around the world rose sharply to record highs in the spring of 2008. Rice prices increased when exporters such as Vietnam, Cambodia, and Egypt announced restrictions. The fact that rice is a relatively lightly traded crop on the world market (only about 7 to 8 percent of total rice production is actually traded on the world market) has exacerbated the vulnerability of world prices to this supply shock . Thailand's 100% B premium long-grain milled rice, a benchmark for global trade prices, exceeded $1,000 per tonne in late April 2008, more than double prices in early February and triple those in November. 2007. Prices in the United States also skyrocketed. , with U.S. long-grain milled rice for export quoted at a record high of $948 per ton in late April 2008, up...... middle of paper ...... by the Philippines, Nigeria, Malaysia and Indonesia, four major consumers and importers of rice. As India imports very little rice, its consumers have not been affected by global rice prices, unlike consumers in the countries mentioned above. Such a phenomenon could lead to a drop in demand for imports, a reduction in trade opportunities, a reduction in rice production, etc. The global rice market is already a thinly traded market, meaning exporters trade only a small proportion of their total production, making it very sensitive to global price fluctuations. The exit of importers for the above reasons could make the market smaller, leading to greater price volatility. Therefore, although such trade policy has proven beneficial for India in the short term, it is neither sustainable nor desirable in the long term. eased export ban on non-basmati rice in September, 2011]