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Economy policy issuesRice and us

World trade in rice is expanding strongly, with a growing number of countries relying on imports to meet their domestic needs, especially in Africa

With few exceptions, major rice producing countries are also large rice consumers. Governments are often, therefore, confronted with the classic policy dilemma of keeping prices low for poor consumers, while keeping them attractive to producers.

Traditionally, the need to resolve these conflicting interests has led to a large degree of government intervention in the sector, making rice one of the most heavily protected agricultural commodities, subject to price stabilization measures and high tariff and non-tariff barriers. This high level of protection has contributed to the low levels of international trade in rice, which currently accounts for only 4-6 percent of global production, compared with about 12 percent for maize and 18 percent for wheat. However, this situation began to change in the 1980s, with the implementation of structural adjustment programmes and, in 1994, with the WTO Agreement on Agriculture, which provided the basis for reduced government intervention and trade liberalization.

Under the new international trade environment, world trade in rice is expanding strongly, with a growing number of countries relying on imports to meet their domestic needs, especially in Africa. While the benefits of the opening to trade have accrued mainly for urban consumers by enabling them to buy rice at lower prices, most of the brunt has been borne by the small, poor farmers in the developing countries, who lack the safety nets and income assistance programmes available to their counterparts in the developed countries.

Developing countries are now confronted with the challenge of keeping abreast of the trade liberalization momentum to reap the benefits associated with a more efficient allocation of resources, while also providing some alleviation to the plight of small producers, especially those who will find it difficult to move to other sectors of the economy during the transition. Some developed countries, however, will face the dilemma of opening their borders to rice from low-cost producers, while at the same time preserving the cultural heritage and environmental benefits associated with rice production systems.