Rice price stabilization in Bangladesh: An analysis of policy options

Abstract

To meet its overall objective of ensuri ng food security for all households, the Government of Bangladesh undertakes several activities: it intervenes in markets to stabilize prices, targets f ood distribution to poor househol ds and provides emergency relief after natural disasters. This paper pr ovides measures of the va riability of domestic and international rice prices, and examines the mix of government intervention and private sector participation in rice markets. The analysis shows that the relatively high degree of price stability achieved in the 1990s was due in large part to private sector imports that stabilized markets following major production shortfalls. Domestic rice procurement contributed relativel y little to raising domestic producer prices at harvest time, involved only a small percentage of fa rmers, and incurred excessive costs following successful harvests because of procurement pric es set far in excess of market prices.