Agriculture Reference
In-Depth Information
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Grain Marketing Parastatals in Asia:
Why Do They Have to Change Now?
SHAHIDUR RASHID, ASHOK GULATI,
AND RALPH CUMMINGS JR.
Context
The initial economic conditions and the rationales for public intervention in
foodgrains markets were remarkably similar in those Asian countries whose
governments intervened in their grain markets. Agriculture was largely weather-
dependent, production variability was high, domestic markets were poorly in-
tegrated, international markets were highly volatile, and the countries had se-
vere liquidity constraints on buying from the international market at times of
scarcity. These countries were vulnerable to crop failures; their foreign ex-
change reserves were meager, and their national food security depended, apart
from “mother nature,” on the goodwill of—and relationship with—donor coun-
tries. These relationships, however, were not always smooth because of sharp
differences in political ideology. Therefore, policy thinking in all of these coun-
tries converged on attaining self-sufficiency, improving food distribution, and
managing food security threats arising from weather-related production shocks.
This thinking coincided with the advent of the Green Revolution, giving the
governments another justification for intervention—that is, mitigating the risks
and uncertainties of the new technology. By the early 1970s, a food policy par-
adigm evolved, with governments directly involved in a procurement-stocking-
distribution chain, which was again very similar among these countries.
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Nevertheless, the countries have had varying experiences over the years.
In the 1980s and 1990s, some countries responded by reducing intervention,
while others held on to the old practices with minimum reforms. The food sub-
sidy bill has decreased in some countries but increased in others. The govern-
ment's shares in grains markets have gone up in some countries but down in
others. This chapter synthesizes these diverse experiences and draw implica-
tions for further reforms. The rest of the chapter is organized as follows: The
next section provides a historical overview of the evolution of policies and in-
stitutions for public interventions, which is followed by a section that analyzes
1. Vietnam, which started late and from a communist beginning, is a partial exception.
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