The Evolution of Rice Price Policies over Four Decades: Thailand, Indonesia and the Philippines

Abstract

Using time series data over the past four decades, the 1960s to 1990s, this paper examines rice pricing policies in Thailand, Indonesia and the Philippines. It analyses the determinants of the paths along which these policies have moved. While it confirms the findings of previous analyses, that price stabilization has been a major policy achievement, it also reveals that stabilization was not necessarily sustained over the entire survey period. It finds that politico-economic factors—such as entry into the GATT, increase in per capita GDP and achievement of rice self-sufficiency—have been among the determinants of rice pricing policy, but the ways in which these factors have affected policy vary among these countries. Such variation, which previous cross-country studies have not analysed, is a reflection of variations in the roles of rice and in the attitudes of policy-makers in these economies. In its conclusion, this study draws policy implications for each country, taking into account differences in the impact.

Notes

¹ For details of the sources and the computational method of RDP and RBP for each country, see Appendix 1.

² Since these analyses use real prices and because the period considered is relatively short (i.e. 10 years each), the CV is little affected by trend.

³ This parastatal was called the Rice and Corn Administration (RCA) until 1972, when it became the National Grain Authority (NGA). In 1981, it became the National Food Authority (NFA).

⁴ The GDP per capita used in our analysis is calculated such that local currency GDP is converted to US$ GDP using the 1995 official exchange rate and is then divided by total population.

⁵ The CUSUM test can be applicable to our dynamic model, which contains a lagged dependent variable among the regressors (Kramer et al., 1988).

⁶ A sample is split into two at a possible break year and then OLS regressions are run separately on each segment. Repeating this process, we compute the residual variances for all the years (sum of squared errors divided by the sample size) and plot them against years. The years having global/local minimum are candidates for break years.

⁷ Although both CUSUM and CUSUM of squares are within the band of 5% significance, the residual variance suggests possible breaks in 1970 and in 1982 where the variances take lower values.

⁸ In 1998, the year of the Asian currency crises, NPC dropped sharply with PGDP. While there might be concern that the magnitude of the positive coefficient of PGDP after the break would be exaggerated by that event, additional regression analyses show that the exclusion of that year does not change the results appreciably, especially regarding the coefficient of PGDP.

⁹ Regression implication that the drop of SSR in the late 1990s (Figure 7) does not significantly explain the rise of protection lends credibility to this explanation.

Additional information

Notes on contributors

Kei Kajisa

The authors gratefully acknowledge useful comments from two anonymous referees, Shigeyuki Abe, David Dawe, Kaliappa Kalirajan, Yujiro Hayami, Masayoshi Honma, Don Larson and Pravin K. Trivedi, as well as editorial assistance from Suzanne Akiyama. We also thank seminar participants at the Foundation for Advanced Study on International Development (FASID) and at the International Rice Research Institute (IRRI). Any remaining errors are ours.

Takamasa Akiyama

The authors gratefully acknowledge useful comments from two anonymous referees, Shigeyuki Abe, David Dawe, Kaliappa Kalirajan, Yujiro Hayami, Masayoshi Honma, Don Larson and Pravin K. Trivedi, as well as editorial assistance from Suzanne Akiyama. We also thank seminar participants at the Foundation for Advanced Study on International Development (FASID) and at the International Rice Research Institute (IRRI). Any remaining errors are ours.