Three Essays on Rice: Consumption, Production and Prices

This dissertation is composed of three essays about rice. The first essay analyzes the income elasticity of demand for rice using a macro panel approach. On the basis of heterogeneous parameter models, our average "global" income elasticity estimate is generally positive and statistically significant. This is in contrast with the negative and significant income elasticity estimate from the homogeneous parameter models. Moreover, the evidence indicates that rice is still an inferior good in Asian countries, including high income Asian countries (e.g., Korea and Thailand), while it is a normal good in other regions of the world. Research finding reveals that low and lower-middle income Asian countries (e.g., Bangladesh, Malaysia and Philippines) have positive rice income elasticities. Meanwhile, countries that have experienced recent growth in population and income (e.g., China and India) still have significantly positive income elasticities.;The second essay provides the evidence of productivity and production risks across land tenure statuses in the Central Luzon region. Based on an unbalanced parcel-level data, we estimate a stochastic production function to examine the land tenure effects on the mean, variance, skewness and kurtosis of the rice yield distribution. New insight has been obtained and shows that ownership and fixed rent contracts face lower production risk (i.e., relative risk premium) compared to share arrangements. Taking land redistribution program in to account, the 1988 CARP may result in productivity improvement and risk reduction over time given the inverse productivity puzzle of smaller farm sizes for new owners from the land redistribution scheme.;The analyses of market integration and price leadership in the low quality rice sector are conducted in the third essay. Using a VEC model, our bivariate cointegration analysis suggests that there exists interdependence of the 25% broken rice prices between Thailand, Vietnam and Pakistan. However, in the multivariate analysis, we find that Indian low quality rice price is cointegrated with low quality rice prices of the other three countries. Assumed parameter restrictions on the VECM, the market price leadership is investigated by using long-run exclusion and weak exogeneity tests. Based on these tests, we find strong evidence (at the 5% level of significance) that Pakistan and India tend to be price leaders in the low quality rice market, while Vietnam tends to be a price follower in both subsamples. In contrast to some of the previous studies on the low quality rice market, we find that Thailand is likely a price follower in this market for the 1996 to 2007 period.;We further investigate the short-run dynamic price relationships among the countries in the low quality rice market using contemporaneous correlation analysis of VEC residuals, Directed Acyclic Graphs (DAG), impulse response functions, and forecast error variance decompositions. Although India serves as a price leader in this market segment, except with Pakistan prices, its price co-movement among other two countries are weak in the case of Indian non-basmati export ban 2007. Moreover, evidence from the additional analysis of dynamic price relationships indicates that there is stronger interdependence of prices among Thailand, Vietnam, and Pakistan, where Thailand and Pakistan tend to be the price leaders and Vietnam is a price follower.