MALAYSIAN RICE TRADE AND GOVERNMENT INTERVENTIONS

Deviga Vengedasalam, Michael Harris and T. Gordon MacAulay

No 100726, 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia from Australian Agricultural and Resource Economics Society

Abstract: Malaysia’s rice sector is highly protected, with the protection justified largely by arguments for food security. The government intervenes in the rice market by providing subsidies to farmers and consumers as well as imposing high import duties. Furthermore, the rice trade is controlled through a sole importer. In this paper, the welfare effects of eliminating the major government interventions in Malaysia’s rice sector are evaluated. A modified spatial price equilibrium model that incorporates a sole importer with a fixed domestic price has been developed to measure the welfare impacts of the market distortions. Four scenarios were developed: (1) removal of the sole importer but continuation of the subsidies and existing tariffs; (2) removal of the subsidies but with the existence of the sole importer; (3) imposition of tariff and (4) free trade. Large net welfare gains and a significant reduction in government expenditures are likely if all forms of government interventions were to be eliminated and a free market allowed.

Keywords: Food; Consumption/Nutrition/Food; Safety (search for similar items in EconPapers)
Pages: 19
Date: 2011
New Economics Papers: this item is included in nep-agr
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aare11:100726

DOI: 10.22004/ag.econ.100726

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