Intervention Policies and Market Integration: A Case of the Rice Markets in Bangladesh
Rice plays an important role in the economy of Bangladesh. However,the current poor state of the rice sector is of great concern to the government.The efficient functioning of the marketing system is severely constrained by the role of the beneficiaries. The consequences are-high marketing margi...
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| Format: | Thesis |
| Language: | English English |
| Published: |
1993
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| Subjects: | |
| Online Access: | http://psasir.upm.edu.my/id/eprint/8044/1/FEP_1993_3_A.pdf |
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| Summary: | Rice plays an important role in the economy of Bangladesh.
However,the current poor state of the rice sector is of great
concern to the government.The efficient functioning of the
marketing system is severely constrained by the role of the
beneficiaries. The consequences are-high marketing margin and
price instability. Any attempt at seeking appropriate measures
to be adopted in order to achieve and sustain a coherent and
comprehensive marketing system calls for an indepth study of two major aspects; the effects and implication of the
government intervention on the rice market and the nature of
integration and price relationship among the various rice
markets in the country. The focus of this thesis lies on these
two important issues related to rice markets in Bangladesh.
A standard partial equilibrium approach was carried out to
measure the effects of the government intervention on the rice market. Various parameters such as welfare gain of the
producers and consumers, changes in the government revenues and
foreign exchange bill were estimate. The results indicated
that from the existing policy regimes, the benefit of
government intervention mostly went to the consumers. Moreover,
the measures could not provide enough incentive to the
producers towards enhanced food grain production.
Secondary data covering the period from 1972 to 1987 were
used to assess the degree and the nature of market integration
between the central market and the other nine district level
rice markets. Analysis by correlation method reflects the
strong association among the rice markets. The results obtained
from the Ravallion approach indicate that the central market
price exhibits price leadership over the other local markets.
The hypotheses of the long run integration and the absence of
the local market characteristics were accepted while those of
short run integration and market segmentation were rejected.
Granger causality test indicated the existence of
unidirectional and instantaneous relation of the central market
with the local ones.
In order to increase the efficiency of rice markets of
Bangladesh, the government should consider the above findings
as realistic guidelines to ensure factors such as attainment of
a high level of coordination among the production and consumption centres, effective price monitoring in the central
market, improvement of communication facilities at the source
of price information, availability of market information to the
trading sectors and liberalization of the present regulations
of the holding of rice stocks. |
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