Analysis Of Rice Market In Madagascar And The Utility Of Sino-Malagasy Relation For Increased Efficiency And Price Stabilization

Faced with a production shortfall in early2004and a sharp rise in the price of imported rice due to a depreciation of the Malagasy franc and a spike in international rice prices, Madagascar attempted to stabilize domestic rice prices through public tenders for rice imports and subsidized sales at official prices. This paper discusses the analysis of the rice market starting from the2004rice crisis, chronicling the events that triggered the crisis and the subsequent interventions by the government, and analyzes the impacts of the policies adopted and steps taken to spur development of the domestic rice market and the effect of Sino-Malagasy cooperation to solve the disarray in rice market in Madagascar. Using a partial equilibrium model, the paper also quantifies the overall costs and benefits of a change in import duties for various household groups, and compares this intervention to a policy of targeted food transfers or security stocks as well as other options for price stabilization, including a reduction in import duties and a security stock policy.