Friday, May 2, 2008

Rice in Asia

"Some politicians and economists are pressing the Phillipines--the world's biggest importer of rice--to change how it subsidizes the staple grain because of the distortions such measures can introduce into the rice market. ... But some economists and politicians say the impact is being exacerbated by the way some governments restrict imports or distort the market through elaborate and corruption-prone subsidies. ... Sen. Edgardo Angara ... [said] 'If private rice traders are allowed to import and sell rice without any restriction, the supply and price of rise will likely stabilize,' ... in a speech to the Senate on Monday. ... Rajat Nag, managing director of the Asian Development Bank, told reporters in Singapore Tuesday, that steps taken by some countries to curb rice exports or imports are having 'counterproductive effects' on what farmers choose to plant and when. Vietnam, Cambodia and Indonesia have limited rice exports, increasing the demand from the biggest exporter, Thailand. ... In the Phillipines, removing rice subsidies would help eliminate theft and corruption in the state-controlled rice-distribution system, Mr. Angara says", WSJ, 23 April 2008.

"With global rice prices at record highs, Indonesia is stepping up border patrols and taking additional measures to deter rice smuggling to other countries, Trade minister Mari Elka Panestu said in an interview. ... Indonesia, a nation of 230 million, situated just to the south of the Phillipines, is one of the few places where production is increasing. ... But Indonesia, like many other Asian nations where rice is a staple food for millions of people, wants to build up stockpiles rather than export surpluses. Indonesia's trade ministry has issued a decree banning private traders from exporting rice, allowing only the nation's food agency to do so. It now fears smuggling and is cooperating with the police and navy to control the nation's porous borders. ... Indonesian President Susilo Bambang Yudhoyono ... said ... the government would remain vigilant in its effort to stamp out smuggling. ... But while global prices have spiked--...Indonesia's rice price has fallen below the global average", WSJ, 26 April 2008.

Angara has this knocked. I wonder if Henry Paulson, our Treasury Secretary could understand Angara's words. Has mankind learned anything in the last 4,000 years? See my 13 November 2007 post.

Indonesia is a living laboratory for something Ludwig von Mises wrote about 80 years ago, the gist of which is: once you start controlling a country's economy, the things you need control continually expand until the economy collapses or you get something akin to Stalinism. I wish the Indonesian government the best of luck.


Anonymous said...

I recommend that the Philippines **NOT** listen to politicians or economists. People will put up with a lot of crap, but if they are starving they will chop off your head and eat you.

Independent Accountant said...

Supposedly Confucius was asked "what do you need to run an empire"? He said, "three things. Food, military equipment and the confidence of the people". Suppose you must give one up, which should it be? Confucius answers, "that's easy. The military equipment. If you have the other two, the people will fight for you with rakes and hoes". Suppose you must give another up, which should it be? Confucius thinks then says, "the food. Because once the Emperor loses the confidence of the people, he loses his head". The Phillipines still have a way to go.