Rice Market Liberalization and poverty in Viet Nam

Abstract

In this study, the authors examine the new patterns of rice marketing in Viet Nam and study how liberalizing both internal and external rice markets has affected food security and poverty. For the first task, they make use of a comprehensive set of surveys carried out by IFPRI in 1995-96. These surveys, covering rice producers, traders, millers, and state-owned enterprises, provide a detailed picture of the new rice marketing system in Viet Nam. For the second task, they assess the household-level impact of rice policy by combining a spatial equilibrium model with household survey data. The spatial equilibrium model is used to simulate the effect office policy on food markets in seven agro-climatic regions of Viet Nam. The survey data are then used to estimate the impact of simulated price changes in each region on real income and poverty among different groups of households. The results suggest that export liberalization does raise rice prices within the country, but that the effects are smaller (in percentage terms) as one moves away from the rice export zone. Furthermore, the higher prices have a positive effect on rural income and a mixed but slightly favorable impact on poverty. Furthermore, relaxing restrictions on the internal movement of rice from south to north also generates net benefits for the country without increasing poverty.