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Production shocks, exports and market prices: An analysis of the rice sector in Myanmar

Author: Dorosh, Paul

Publisher: Intl Food Policy Res Inst

Published: 2019-04-27

Total Pages: 30

ISBN-13:

Since 2012/13, rice exports to China (which may have reached two million tons in 2015/16) boosted total demand for Myanmar’s rice and rice prices. In mid-2016, however, China stopped rice imports through the main land entry point, putting substantial downward pressure on prices. Analysis presented in this paper, based on econometric estimates of consumption parameters and a simple model of Myanmar’s rice supply and demand, suggests that market prices would fall by 26 to 43 percent or more (in real terms) in the absence of increased exports to the world market and/or government domestic procurement. Such a decline in prices could have seriously harmed Myanmar’s rice producers, including many poor farmers with marketable surpluses. Model simulations suggest that government procurement of about one million tons would limit the estimated price decline to only 17 to 30 percent. Further refinements in the simulations are needed to take account for the seasonal nature of paddy production in Myanmar, possible price-responsiveness of export demand and the effects of changes in paddy incomes on farmer demand for rice. Medium-term analysis of procurement, storage and future sales is needed to analyze fiscal costs under various scenarios, as well, covering alternative shocks to production, export demand and world prices. Nonetheless, the main results are clear: without substantial market interventions on the order of one million tons (milled rice equivalent), the paddy (rice) price could fall dramatically when production increases or export demand declines.

Production Shocks, Exports and Market Prices

Author: Paul Dorosh

Publisher:

Published: 2019

Total Pages: 30

ISBN-13:

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Since 2012/13, rice exports to China (which may have reached two million tons in 2015/16) boosted total demand for Myanmar's rice and rice prices. In mid-2016, however, China stopped rice imports through the main land entry point, putting substantial downward pressure on prices. Analysis presented in this paper, based on econometric estimates of consumption parameters and a simple model of Myanmar's rice supply and demand, suggests that market prices would fall by 26 to 43 percent or more (in real terms) in the absence of increased exports to the world market and/or government domestic procurement. Such a decline in prices could have seriously harmed Myanmar's rice producers, including many poor farmers with marketable surpluses. Model simulations suggest that government procurement of about one million tons would limit the estimated price decline to only 17 to 30 percent. Further refinements in the simulations are needed to take account for the seasonal nature of paddy production in Myanmar, possible price-responsiveness of export demand and the effects of changes in paddy incomes on farmer demand for rice. Medium-term analysis of procurement, storage and future sales is needed to analyze fiscal costs under various scenarios, as well, covering alternative shocks to production, export demand and world prices. Nonetheless, the main results are clear: without substantial market interventions on the order of one million tons (milled rice equivalent), the paddy (rice) price could fall dramatically when production increases or export demand declines.

Commodity Shocks and Exchange Rate Regimes: Implications for the Caribbean Commodity Exporters

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2021-04-23

Total Pages: 53

ISBN-13: 1513582593

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Declining commodity prices during mid-2014-2016 posed significant challenges to commodity-exporting economies. The severe terms of trade shock associated with a sharp fall in world commodity prices have raised anew questions about the viability of pegged exchange rate regimes. More recently, the COVID-19 pandemic and the measures needed to contain its spread have been associated with a significant disruption in several economic sectors, in particular, travel, tourism, and hospitality industry, adding to the downward pressure on commodity prices, a sharp fall in foreign exchange earnings, and depressed economic activity in most commodity exporters. This paper reviews country experiences with different exchange rate regimes in coping with commodity price shocks and explores the role of flexible exchange rates as a shock absorber, analyzing the macroeconomic impact of adverse term-of-trade shocks under different regimes using event study and panel vector autoregression techniques. It also analyzes, conceptually and empirically, policy and technical considerations in making exchange rate regime choices and discusses the supporting policies that should accompany a given regime choice to make that choice sustainable. It offers lessons that could be helpful to the Caribbean commodity-exporters.

World Economic Outlook, April 2012

Author: International Monetary Fund. Research Dept.

Publisher: International Monetary Fund

Published: 2012-04-17

Total Pages: 299

ISBN-13: 1475507038

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The April 2012 issue of the World Economic Outlook assesses the prospects for the global economy, which has gradually strengthened after a major setback during 2011. The threat of a sharp global slowdown eased with improved activity in the United States and better policies in the euro area. Weak recovery will likely resume in the major advanced economies, and activity will remain relatively solid in most emerging and developing economies. However, recent improvements are very fragile. Policymakers must calibrate policies to support growth in the near term and must implement fundamental changes to achieve healthy growth in the medium term. Chapter 3 examines how policies directed at real estate markets can accelerate the improvement of household balance sheets and thus support otherwise anemic consumption. Chapter 4 examines how swings in commodity prices affect commodity-exporting economies, many of which have experienced a decade of good growth. With commodity prices unlikely to continue growing at the recent elevated pace, however, these economies may have to adapt their fiscal and other policies to lower potential output growth in the future.

Commodity Prices and Markets

Author: Takatoshi Ito

Publisher: University of Chicago Press

Published: 2011-02-15

Total Pages: 352

ISBN-13: 0226386902

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Fluctuations of commodity prices, most notably of oil, capture considerable attention and have been tied to important economic effects, such as inflation and low rates of economic growth. Commodity Prices and Markets advances our understanding of the consequences of these fluctuations, providing both general analysis and a particular focus on the countries of the Pacific Rim. The volume addresses three distinct subjects: the difficulties in forecasting commodity prices, the effects of exogenous commodity price shocks on the domestic economy, and the relationship between price shocks and monetary policy. The ability to forecast commodity prices is difficult but of great importance to businesses and governments, and this volume will be invaluable to professionals and policy makers interested in the field.

Terms-of-Trade Shocks are Not all Alike

Author: Federico Di Pace

Publisher: INTERNATIONAL MONETARY FUND

Published: 2020-12-11

Total Pages: 61

ISBN-13: 9781513563916

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When analyzing terms-of-trade shocks, it is implicitly assumed that the economy responds symmetrically to changes in export and import prices. Using a sample of developing countries our paper shows that this is not the case. We construct export and import price indices using commodity and manufacturing price data matched with trade shares and separately identify export price, import price, and global economic activity shocks using sign and narrative restrictions. Taken together, export and import price shocks account for around 40 percent of output fluctuations but export price shocks are, on average, twice as important as import price shocks for domestic business cycles.

OECD-FAO Agricultural Outlook 2021–2030

Author: Food and Agriculture Organization of the United Nations

Publisher: Food & Agriculture Org.

Published: 2021-07-05

Total Pages: 337

ISBN-13: 9251346089

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The Agricultural Outlook 2021-2030 is a collaborative effort of the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations. It brings together the commodity, policy and country expertise of both organisations as well as input from collaborating member countries to provide an annual assessment of the prospects for the coming decade of national, regional and global agricultural commodity markets. The publication consists of 11 Chapters; Chapter 1 covers agricultural and food markets; Chapter 2 provides regional outlooks and the remaining chapters are dedicated to individual commodities.

Changing Patterns of Global Trade

Author: Nagwa Riad

Publisher: International Monetary Fund

Published: 2012-01-15

Total Pages: 87

ISBN-13: 1463973101

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Changing Patterns of Global Trade outlines the factors underlying important shifts in global trade that have occurred in recent decades. The emergence of global supply chains and their increasing role in trade patterns allowed emerging market economies to boost their inputs in high-technology exports and is associated with increased trade interconnectedness.The analysis points to one important trend taking place over the last decade: the emergence of China as a major systemically important trading hub, reflecting not only the size of trade but also the increase in number of its significant trading partners.

Food Price Volatility and Its Implications for Food Security and Policy

Author: Matthias Kalkuhl

Publisher: Springer

Published: 2016-04-12

Total Pages: 626

ISBN-13: 3319282018

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This book provides fresh insights into concepts, methods and new research findings on the causes of excessive food price volatility. It also discusses the implications for food security and policy responses to mitigate excessive volatility. The approaches applied by the contributors range from on-the-ground surveys, to panel econometrics and innovative high-frequency time series analysis as well as computational economics methods. It offers policy analysts and decision-makers guidance on dealing with extreme volatility.

Exporting Through Intermediaries: Impact on Export Dynamics and Welfare

Author: Parisa Kamali

Publisher: International Monetary Fund

Published: 2019-12-27

Total Pages: 58

ISBN-13: 1513519875

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In many countries, a sizable share of international trade is carried out by intermediaries. While large firms tend to export to foreign markets directly, smaller firms typically export via intermediaries (indirect exporting). I document a set of facts that characterize the dynamic nature of indirect exporting using firm-level data from Vietnam and develop a dynamic trade model with both direct and indirect exporting modes and customer accumulation. The model is calibrated to match the dynamic moments of the data. The calibration yields fixed costs of indirect exporting that are less than a third of those of direct exporting, the variable costs of indirect exporting are twice higher, and demand for the indirectly exported products grows more slowly. Decomposing the gains from indirect and direct exporting, I find that 18 percent of the gains from trade in Vietnam are generated by indirect exporters. Finally, I demonstrate that a dynamic model that excludes the indirect exporting channel will overstate the welfare gains associated with trade liberalization by a factor of two.