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FAO TRADE POLICY TECHNICAL NOTES - No. 12. Rice: what do analytical model results tell us?

FAO TRADE POLICY TECHNICAL BRIEFS - No. 12 Rice Liberalization: Predicting Trade and Price Impacts









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    In the context of the 2007-08 rise in world food prices, this book examines how government policies caused and responded to soaring prices in the case of rice, the world’s most important source of calories for the poor. Case studies of policy reactions in different countries provide the understanding necessary to evaluate the impact of trade policy on the food security of poor farmers and consumers. They also provide important insights into the concerns of developing countries that are relevant for future international trade negotiations in key agricultural commodities. As a result, more appropriate policies can be put in place to ensure more stable food supplies in the future.
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    This paper examines the complex relationship between rice prices and economic growth, poverty reduction, and food security in Bangladesh including the impact on producers and consumers. The impact on macro variables is also examined. Using available literature and knowledge of Bangladesh, the researchers examine whether or not a relationship between economic growth/poverty reduction in Bangladesh and rice prices likely exists, and also discusses the mechanisms through which the two are potentially related. The paper finds that historically, the rice sector used to dominate Bangladesh agriculture and the economy as a whole, determining GDP growth rates, inflation, wages, employment, food security and poverty with the rice price being a very sensitive economic and political economy variable. This has changed dramatically with a much more diversified agricultural economy, declining share of agriculture and rice in GDP and rapid industrialization and growth of services. The rice sector (production) has benefited immensely from the Green Revolution, tripling production in three decades and continuing to play a significant role in employment creation and food security. It also benefited from the trade liberalization and structural adjustment reforms of the 1980s and 1990s that served to open up agriculture to world market forces while also reducing subsidies and withdrawing from a number of direct interventions. The startling fact is that the performance of the sector was accompanied by a long–term decline in real rice prices. It is unlikely that this kind of performance is sustainable in the absence of any further technological, cost–reducing breakthroughs so that policy makers need to focus on how to deliver price and non–price incentives to this important sector.
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    A Joint FAO/IAEA Expert Consultation on Validation of Analytical Methods for Food Control was held in Vienna, Austria, from 2 to 4 December 1997. The Consultation participants are listed in Annex 1. The Consultation was opened by Dr. James Dargie, Director, Joint FAO/IAEA Division, who welcomed the participants on behalf of the Directors-General of both FAO and IAEA. In welcoming the participants, Dr. Dargie outlined the increased emphasis and importance of Codex activities and stand ards within the Joint FAO/IAEA Division, especially as they relate to international trade. Many of these standards involve chemical analysis of food products and such analyses must be conducted with appropriate and validated analytical methods. Up to the time of this Consultation, the validation requirements of a method used for Codex purposes have been rigourous and in some instances Codex Committees have requested extensive collaborative studies. There are, however, alternative valid ation procedures which this Consultation has been asked to consider. For a method to be accepted and used by national governments, the validated method must be both practical and suitable for use. Dr. Dargie underlined the importance of the Consultation in providing international guidance and recommendations in this area. He also stressed the importance of the Consultation in guiding future work within the recently established FAO/IAEA Training and Reference Centre for Food and Pestici de Control. He pointed out that the fundamental objective of this Centre was to assist member nations in implementing Codex standards to facilitate international trade in food and agricultural commodities and thereby assist sustainable food security.

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